‘A rainy island with a hostile tax system is a hard sell’: Crypto industry reacts to UK Chancellor’s budget statement

Crypto escaped fresh tax rises in the UK's latest budget statement. However, the government is pressing ahead with tougher reporting and regulatory measures to tighten oversight of the sector amid concerns over jurisdictional competitiveness.

In her Autumn Statement on Wednesday, UK Chancellor of the Exchequer Rachel Reeves avoided further rises to capital gains taxes that hit crypto investors last year, outlining plans including a continued freeze on income-tax thresholds, upcoming increases to taxes on dividend, savings and property income, and new limits on pension salary-sacrifice benefits. Reeves also set out further measures intended to broaden the tax base and support public services.

The Autumn Statement serves as the UK government's mid-cycle fiscal update, used to revise forecasts and outline policy direction ahead of the full spring Budget, where the Chancellor typically announces the main tax and spending measures for the coming financial year.

Gemini Head of UK Compliance Azariah Nukajam welcomed the decision. "It's great to see that there will not be any increases to taxes on crypto, meaning crypto is being treated like any other asset class, ensuring it is a viable alternative investment in the long-term," she told The Block.

However, recent legislative and regulatory announcements, such as the Draft Statutory Instrument's proposed new rules for crypto firms, coupled with the budget announcement, indicate that "tougher, more 'traditional finance'-style regulation and tax transparency are going ahead as planned," Nukajam said.

Nukajam pointed to the introduction of the Cryptoassets Order in May, the rising number of HMRC warning letters sent to suspected under-payers, and the upcoming Crypto-Asset Reporting Framework (CARF) regime — a new global tax transparency system that will expand oversight and exchange reporting of customer crypto transactions from 2026 — as evidence of the government's intent to close tax loopholes, and increase reporting and compliance standards across the crypto sector more generally.

She argued that a more structured regulatory environment will help firms that prioritize consumer protection and view regulation as part of integrating crypto into mainstream UK finance, which, in turn, will "attract institutional interest and boost trust with consumers." 

The budget announcement followed last year's capital gains tax changes, which raised rates on crypto and other investment assets from 10% to 20% to 18% and 24%, respectively, depending on the taxpayers' income band.

Nukajam said those levels still give the UK a competitive edge over jurisdictions such as Spain, where rates reach 28%, and France, which recently voted to class large crypto holdings over €1.3 million ($1.5 million) as "unproductive wealth," while suggesting the UK could still learn from Germany's approach to long-term holdings, where crypto can be tax-free after one year.

Ultimately, favourable taxation policies and interoperable, robust regulatory regimes aligned with other jurisdictions are essential if the UK wants to deliver on its ambition to become a crypto hub, she added.

Concerns over UK competitiveness

Some crypto industry figures voiced broader concerns that the UK risks falling behind global rivals despite positive signals on entrepreneurial support in the Autumn Statement.

Ben Cousens, co-founder and CEO of Antidote, a London-based accelerator for Bitcoin-powered fintech, said his team was encouraged by plans to expand investment schemes and consult on attracting more entrepreneurs. He argued the UK still has the ingredients to "lead the next wave of global innovation," but said this budget announcement was a missed chance "to give founders a reason to build here, scale here, and stay here."

Cousens said the government could go further by tactically backing sectors set to dominate growth — including AI, fintech, and Bitcoin — as it did previously with video games and film that unlocked growth and employment in both sectors. "If we create the right environment for ambitious entrepreneurs to experiment and grow, the UK can reclaim its position as the best place in the world to build transformative technology."

Others delivered sharper warnings about the UK's competitive position. Richard Muirhead, co-founder and chairman of Fabric Ventures, told The Block that the budget "hurts" technology startups and risks driving founders to jurisdictions with better combinations of talent, quality of life, regulation, and taxes. "With so many city-states in this global war for their loyalties, a rainy island with a hostile tax system is a hard sell," he said.

"Venture capital available in the UK already falls short of global averages at every stage of the founder journey, from inception to IPO. With the Autumn Statement set to reduce the incentive even to try to stay and build, the UK is engaging in economic self-harm," Muirhead continued, arguing that high-growth fintech, AI, and Web3 firms will likely build elsewhere. "The UK's economic prosperity and national security turn on the excellence of its efforts to find, fund, and foster the top 1 per cent," he said.

Echoing those views, Adam Simmons, CSO at Radix, said the UK's traditional strength as a bridge between the U.S. and Europe has weakened as the Financial Conduct Authority's “hostile approach to crypto" pushes talent abroad.

Citing recent Office for National Statistics (ONS) figures showing a sharp rise in net emigration to 114,000 in 2024, he warned that the UK is losing the skills needed to compete globally in digital assets. Simmons argued that a more supportive environment could deliver high-skilled jobs and strengthen demand for UK bonds through stablecoin issuance, positioning the country more firmly in future digital asset infrastructure.