In a push to strengthen the UK's position in the global digital economy, several UK trade groups are urging the government to include blockchain technology as a central component of its technology cooperation with the United States. This appeal comes ahead of President Donald Trump's visit to the UK next week, with the groups emphasizing the importance of distributed ledger technology (DLT) for maintaining the UK's competitive edge in the financial sector.

The trade groups, representing finance, technology, and crypto sectors, have jointly penned a letter to Business Secretary Peter Kyle and Economic Secretary to the Treasury Lucy Rigby, advocating for blockchain to be a "core strand" of the proposed "UK-US Tech Bridge". Signatories include the UK Cryptoasset Business Council, UK Finance, and TheCityUK. The letter warns that excluding digital assets from the UK-US Tech Bridge would be a missed opportunity, potentially leaving the UK behind other regions like the Middle East and Asia in setting future financial standards.

The groups highlight the strategic importance of stablecoins and tokenization for both economies. Tokenization, the process of representing assets like stocks, bonds, or deposits on a blockchain ledger, and stablecoins, cryptocurrencies pegged to fiat currencies and backed by reserves, are gaining traction and could foster strong transatlantic partnerships if incorporated into trade agreements. The letter emphasizes that without coordinated action, UK businesses may face fragmented regulations, reduced access to transatlantic markets, and increased competitive pressures.

The "UK-US Tech Bridge" initiative aims to deepen collaboration on advanced technologies, including artificial intelligence, quantum computing, and cybersecurity. While government officials note existing alignment in these areas, the trade groups argue that including blockchain would further strengthen this partnership. Coordinated action, they say, will help UK firms navigate regulatory environments, access transatlantic markets, and maintain a leadership role in financial innovation as crypto adoption expands worldwide.

This push for blockchain inclusion comes as the UK is actively developing its regulatory framework for crypto assets. The Financial Conduct Authority (FCA) is currently consulting on regulations covering stablecoins, tokenization, and crypto trading, with licenses expected to open next year. Furthermore, the FCA has lifted a 4-year ban, and UK retail investors will be allowed to buy crypto exchange-traded notes (cETNs) again starting in October 2025, under FCA-approved platforms.

Ambassador to Washington, Lord Peter Mandelson, has stressed the need for a transatlantic technology partnership to prevent China from overtaking the West in key technological fields. He likened the proposed pact to Cold War-era agreements and emphasized the need for alignment with Washington in sensitive sectors.

Some argue that the UK needs to adopt a more flexible, US-style approach to technology regulation to fully capitalize on post-Brexit freedoms and position itself as a more innovative partner for the United States. A public petition calling for a pro-innovation strategy for blockchain and stablecoins has gained traction, further highlighting the growing support for the technology within the UK. The petition calls for a comprehensive framework, including stablecoin regulation, blockchain adoption, and the appointment of a blockchain "czar".

The UK's blockchain innovation ecosystem is thriving, particularly in London, with a growing number of blockchain and crypto firms, cutting-edge research at universities, and a deep talent pool. Input | Output (IO), a blockchain infrastructure and research engineering firm, recently joined CryptoUK, a trade association promoting fair regulation and engagement with policymakers. This collaboration highlights the industry's commitment to shaping the UK's digital asset landscape.

Ultimately, the UK's trade groups believe that embracing blockchain technology in its cooperation with the US is crucial for maintaining its global competitiveness, fostering innovation, and shaping the future of finance.