The soaring office towers of Canary Wharf stand as testimony to Britain’s golden era of smart regulation and financial ingenuity, cementing London’s long tradition as the world’s financial capital.

Today, many of those offices are, tellingly, being converted into flats while futuristic skyscrapers rise overseas, most notably in the UAE, signalling a shift in the centre of global finance.

After revised economic figures on Monday signalled the UK teetering on the edge of recession, Economic Secretary to the Treasury Darren Jones insisted the government’s “absolute focus” for 2025 remains on driving growth.

The new government cannot afford to overlook the City, long the engine of Britain’s economy. Labour’s focus on energy and planning reform is commendable, but the rise of digital finance—cryptocurrencies, tokenisation, and beyond—demands attention. And fast.

The Financial Conduct Authority’s (FCA) “Crypto Roadmap” marks the first quarter of next year as critical for crypto’s future in the UK. Key regulations on trading platforms, order handling, lending, and prudential rules are all set to be announced.

At the same time, initiatives like Digital gilts roadmap, the Bank of England’s Digital Securities Sandbox 

and the UK’s Central Bank Digital Currency (CBDC) are promising developments. Yet, consultation on the CBDC began in 2021 and has since seen minimal progress.

I am concerned that, as with most frontier technology, the language of regulators and the posture of politicians this year has been overly focused on “safety” rather than speed, innovation, and, yes, risk. True innovation—like that of the 1980s—requires a willingness to experiment, even if it sometimes leads to failure. Often, this means less regulation, not more.

Historically, the City’s success rested on three pillars: a robust legal framework, its strategic geographic and time-zone advantages, and a culture that celebrated innovation and rewarded success.

However, in the wake of the 2008 financial crisis and the long shadow it cast, we have become overly risk-averse. A well-placed desire to avoid the errors of the past is blunting our ability to innovate at pace and keep up with competitors.

We now stand on the brink of a new paradigm in financial services—one driven by blockchain, artificial intelligence (AI), and digital currencies. The UK is still well-positioned to capitalise on this shift and maintain its hard-earned position of global leadership. But will our reluctance to embrace risk and change hold us back?

Through my twenty-five-year career in industry, and now as co-chair of the Digital Market and Digital Money APPG and vice-chair of the AI APPG, I am acutely aware of the transformative potential of these technologies. Start-up blockchain and AI-driven companies are attracting millions of pounds in investment, with Angel, Venture, and private equity funds beating a path to their door. Investors are willing to take risks because of the potential rewards. New businesses of this type can scale globally within months, unburdened by traditional barriers. Yet, too often, policymakers overlook these economic success stories.

In Westminster, discussions around crypto are often dominated by scare stories and extreme examples. Yes, there is volatility but the barrel is not full of rotten apples, and the risks can be overemphasised, while the opportunities are neglected, and blockchain can even be dismissed as either a curiosity or, worse, a right-wing fad. 

This must change. The urgency of this moment cannot be overstated. This year alone, the mere prospect of Donald Trump returning to the White House has sent crypto markets soaring. And with the combined leadership of Trump and tech entrepreneur extraordinaire Elon Musk, the U.S. is preparing to throw its political and financial weight behind digital assets. Meanwhile, China, traditionally cautious about financial deregulation, is heavily investing in AI and digital currencies to maintain its global influence.

Here in the UK, we risk being left behind. Unlike the Open Banking revolution, where the UK boldly led the world in 2018 by introducing pioneering regulations to unlock customer banking data, we are hesitating when it comes to crypto.

The lessons of the recent past are clear. The dot-com boom of the late 1990s and the app-driven tech revolution of the 2000s brought immense innovation, investment, jobs and prosperity to the UK. I saw first-hand how success and failure went hand in hand. This is why I convinced the Mayor of London to allow me to establish the Digital Office for London in 2010: to support opportunity and risk-takers and remove barriers from their way.

This new revolution, powered by blockchain and AI, will be no different. There will be risks and setbacks, but the cost of overregulation—or worse, bad regulation—will far outweigh the cost of failure.

According to the Department for Work and Pensions, the digital economy already contributes £161 billion to the UK’s GDP, and AI alone could add £400 billion by 2030, according to Public First.

Meanwhile, revenue from the UK cryptocurrency market has stagnated or fallen since 2021. It is projected to shrink further by 2025, even as the number of users climbs to an estimated 23.95 million.

Shockingly, and despite the increasing adoption of digital assets by businesses and individuals, the UK has failed to grow as a global hub for crypto for nearly half a decade.

We must regain our appetite to be pioneers and innovators, not technocrats and naysayers. Global competition means The City could quickly lose out, and the entire UK economy will suffer the consequences for a generation.