Crypto Passporting: Could the US-UK Task Force Unlock a New Era for Digital Assets?

As Adrienne Harris steps down as head of New York’s Department of Financial Services (DFS), she leaves behind a provocative idea: crypto passporting between the US and UK. For institutional investors and financial services firms on both sides of the Atlantic, it could be a transformational shift or another regulatory mirage.

 

So, what exactly is crypto passporting, and why does it matter now?

 

Passporting reimagined for the digital age

 

At its core, “passporting” would allow crypto firms licensed in one jurisdiction (say the UK) to operate in another (like the US) without a full reauthorisation. It’s not a new concept - the EU used it pre-Brexit - but applying it to digital assets in a post-MiCA, post-FTX world is novel.

 

With the UK-US Task Force on Markets of the Future now launched, and both jurisdictions operating increasingly mature crypto frameworks, the groundwork is being laid for cross-border regulatory cooperation.

 

What’s driving momentum?

 

· Market Demand for Clarity: UK and US crypto companies seek cleaner, faster entry into each other’s markets, without duplicative licensing processes that hinder innovation and increase compliance costs.

· Institutional Capital Is Ready: From tokenised funds to crypto custody, institutional players are exploring digital assets, but need aligned standards, especially around AML, custody rules, and stablecoin issuance.

· Post-Brexit Positioning: The UK aims to establish itself as a global fintech and cryptocurrency hub. Creating seamless links with the US could strengthen its appeal to asset managers, exchanges, and fintech developers.

· US Political Tailwinds: With regulatory appetite shifting under a second Trump presidency, the US may become more accommodating to digital innovation - opening the door for private sector-led, interoperable frameworks.

 

What could this mean for UK-based investors?

 

For GIS UK clients, including wealth managers, institutional allocators, and infrastructure investors, the implications could be material.

 

1. Access and efficiency

 

If a UK-regulated crypto custodian, stablecoin issuer or exchange could operate in the US under a passporting regime, it would unlock:

 

· Faster market access

· Lower onboarding friction for cross-border clients

· Reduced regulatory duplication (e.g., only one licensing jurisdiction)

 

This could streamline operations for multi-market strategies and allow greater confidence in scaling digital infrastructure across borders.

 

2. Regulatory divergence still matters

 

While both countries use comparability assessments (e.g., the UK’s Overseas Recognition Regime), aligning crypto standards is no small feat. Passporting would require agreement on:

 

· Custody risk management standards

· Stablecoin issuance regulation

· Anti-money laundering (AML) enforcement and monitoring

· Cyber resilience and operational oversight

 

Partial harmonisation may help, but full equivalence remains a politically and technically complex issue.

 

3. Who benefits?

 

Let’s examine the finer details, because to navigate this potentially arduous initial process, there must be long-term benefits and winners in the business world.

 

· Crypto-native firms get faster growth pathways.

· Traditional financial institutions can integrate crypto into existing offerings with fewer compliance hurdles.

· Investors get better protections and access to regulated offerings across borders.

 

But the risk of regulatory arbitrage also rises. If one jurisdiction softens enforcement or diverges materially, it could create systemic vulnerabilities - especially in high-leverage, high-liquidity environments.

 

A role for professional investors

 

For UK investors, this isn’t just a crypto story - it’s about the infrastructure of tomorrow’s financial markets.

 

The DFS, for example, already supervises global giants such as Barclays, Deutsche Bank, and Coinbase. Its cooperation with the Bank of England on crypto and payments is already underway through a staff secondment programme.

 

This signals a clear shift: digital finance is becoming institutional, and cross-border regulatory thinking is beginning to catch up.

 

UK firms looking at:

 

· Tokenised real assets

· On-chain funds or bonds

· AI-enhanced compliance tools

 

…will want to stay close to these developments, especially as regulatory regimes converge.

 

Final thoughts: Opportunity, but with clear boundaries

 

Crypto passporting between the US and UK is not imminent, but the conversation marks a meaningful turning point. It reflects growing maturity in both jurisdictions and a shared recognition that fragmented regulation hampers innovation.

 

For GIS UK clients, the key will be to:

 

· Track the task force recommendations (due within 180 days)

· Assess how regulatory shifts align with internal compliance, custody, or fund strategies

· Be ready to move when interoperability creates investable openings

 

In a digital-first financial future, those who understand the infrastructure shifts best will allocate resources more effectively and earlier.

 

#UKInvesting #CryptoRegulation #DigitalAssets #CrossBorderFinance #Passporting #FintechPolicy #GISUK

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