UNITED KINGDOM Trends and Developments Contributed by: James Burnie, Chris Elwell-Sutton, Tom Goff and Thomas Hulme, gunnercooke llp
is a framework of rights backing the firms operating in the EU. The USA has taken almost the exact opposite approach, the idea being that regulation restricts innovation and makes it more expensive, and, in any event, constructive regulation is impossible while the real potential issues within an industry are still unknown. As a result, the argument is made that it is better to allow companies to operate in a low- or no-regulation environment, and then step in with regu - lation only if and to the extent that things go wrong. The result is two very different approaches to growth, demonstrated clearly by the fact that, for example, the EU has implemented the EU AI Act, an attempt to introduce a comprehensive regime for regulating AI, whereas the USA has not followed suit. The United Kingdom’s approach incorporates ele - ments of both philosophies. Historically, the UK was part of the EU, and, notwithstanding Brexit, has in many areas chosen to remain broadly aligned with the European regulatory regime subject to some British idiosyncrasies. In AI, for instance, the UK has adopted a set of overarching AI principles which include trans - parency, explainability and fairness. These principles line up closely with those underpinning the EU AI Act; however, rather than forming the basis of a genuine statutory framework, they sit at the top of a unique sectoral approach whereby the FCA and other reg - ulators are empowered to guide the industries they regulate. Similarly, with data protection and privacy, the UK operates under the UK GDPR, a regime almost identical to the EU equivalent but with some areas of derogation, including under the recent Data Use and Access Act 2025. The reasons for this continued closeness to Europe include the desire to maintain the UK’s prized status with the European Commission as an “adequate” jurisdiction. In addition, the practical reality in areas such as data protection, and increas - ingly artificial intelligence, is that businesses seeking to offer data-related services or operate AI platforms within the EU without demonstrable compliance with these regulatory frameworks may place themselves at a significant, and potentially damaging, commercial disadvantage.
TThis same dual approach can be seen with the original moves in terms of regulating the crypto-asset industry, as both the UK and the EU started by taking an approach heavily influenced by stopping money laundering before seeking to develop a more com - prehensive regime that generally builds on existing approaches to securities. More recently, however, the UK has shown greater alignment with the United States, opting not to introduce bespoke AI legislation and instead pursuing an approach to crypto-asset regulation more in line with that in the United States. In this way, being more of a David than a Goliath, the UK is effectively seeking to leverage the position of these other jurisdictions. And whilst that might not sound as exciting as being the Goliath in the relation - ship, David did end up doing well. From the Theory of Macro Politics to the Reality on the Ground: The Good, the Bad and the Ugly So, given the general movement, what is the practical impact for those actually in the market? The good Indeed, from a United Kingdom perspective, we are seeing a lot of positives that are attracting businesses into the UK market. Firstly, it should be acknowledged that the UK is already well established as a fundraising hub for innovative businesses. In this respect, we have seen momentum continue, with the UK being an attractive place for equity raises. This continues to be the case even for firms that (for example) sell tokens along - side equity, and it is a common model for investment to be split into the equity of a UK entity alongside crypto-assets sold by a legal entity set up in another jurisdiction. Although there has been some pressure from US investors to relocate entities to the USA, the fact that the UK is generally a cheaper and culturally less litigious jurisdiction to operate from has served to protect the UK market. Secondly, the UK is increasingly emerging as pos - sibly the premier litigation hub, particularly given that other rival jurisdictions for litigation work have in some cases become increasingly politicised, in contrast to the relative independence associated with the UK courts. We are, therefore, seeing a rise in non-UK
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