The investment and adoption of both cryptocurrency and the broader category of cryptoassets is growing rapidly worldwide. However, crypto investment and crypto adoption are two very different things. In the UK, investment is already relatively widespread, and London is considered one of the main investment hubs for cryptocurrency. But the question of how and when mainstream adoption of cryptos like bitcoin will come about remains hotly debated.

Increasing trust

Most investors feel that crypto will enjoy mainstream adoption within the next ten years and will also overtake traditional investments on the financial market. Increasing trust is the most important factor in terms of encouraging greater investment and adoption. As more people learn how to trade bitcoin, the currency will become more understood and accepted.

Emerging markets

Globally, crypto adoption is most common in developing countries and emerging markets, where it is viewed as a more trustworthy alternative to an unstable national currency. In 2021, El Salvador officially adopted bitcoin as legal tender, and the top countries for crypto adoption include Vietnam, India, Pakistan and Ukraine.

Growing adoption

People turn to crypto in these countries for a variety of reasons. Some hope to preserve their savings in the face of the devaluation of fiat currency. Others use it to send money abroad when there are restrictions on the amount of the national currency that can be taken out of the country.

According to Chainalysis, global crypto adoption jumped 880% in 2021, and governments around the world are starting to back crypto regulation, including the EU. Stronger, but progressive regulation is undoubtedly necessary in order to increase trust, but this must be balanced with the desire for privacy and freedom from red tape, two factors which many see as crypto’s most important qualities.

The situation in the UK

In April 2022, HM Treasury announced plans to make the UK a “global cryptoasset technology hub”. They outlined plans to recognise and regulate stablecoins (presumably tied to the pound) as a valid payment form and to make sure that the UK tax system was favourable for crypto investment.

Other proposals included setting up a “financial market infrastructure sandbox”, and a “cryptoasset engagement group” alongside commissioning a bespoke NFT from the Royal Mint. Although Rishi Sunak, the driving force behind the plan, is no longer chancellor, the Financial Services & Markets Bill is still going ahead, with new PM Liz Truss seemingly very much in favour of bringing cryptocurrency in from the cold.

Clearer legal framework

Regulation and a clearer legal framework will encourage adoption by addressing the perceived risks associated with crypto. The market is still largely unregulated in the UK, bar anti-money laundering regulations and the need for crypto businesses to be registered with the Financial Conduct Authority (FCA).

Consumer protection

In terms of widespread adoption, an important issue that needs to be addressed is protection for consumers. At present, none exists, and the FCA is clear that bitcoin investors and users do so at their own risk.

Crypto in all its forms is here to stay. The gradual creation and implementation of a proper regulatory system in the UK will mean greater security and greater confidence. As more UK businesses adopt crypto successfully, the various currencies will become more widely accepted across the nation.