Summary of Concerns
- •Aave founder argues the UK’s financial promotions regime is restricting crypto growth.
- •Says overly strict rules prevent innovation and slow industry progress.
- •Calls for more flexible policies to support responsible crypto development.
Founder's Critique of UK's Crypto Regulations
Aave founder Stani Kulechov has criticized the UK’s ‘financial promotions’ regime, warning that the country’s stance on crypto advertising and digital asset onboarding is stifling growth in a sector it claims to want to be a leader. Kulechov argues that the rules designed to curb misleading crypto promotions have instead created unnecessary barriers for stablecoin and digital-money products, making it harder for both users and developers to operate in the UK market.
Stablecoins Treated as High-Risk Tokens
According to Kulechov, the regime’s one-size-fits-all approach treats all crypto assets identically, including stablecoins intended to function like digital pounds or dollars. This misalignment, he said, ignores how stablecoins are increasingly used for payments, settlement, and day-to-day finance. Industry players report that onboarding users now involves long questionnaires, enforced cooling-off periods, and repetitive friction points, even for basic actions like topping up a balance. The result, Kulechov noted, is a user experience far removed from what should be expected in a modern fintech environment.
Rules Driving Builders and Users Away
The restrictions have also made it more expensive for UK crypto developers to build compliant, transparent, and competitive stablecoin products. Kulechov warns that instead of promoting innovation, the regime effectively penalizes it. As a consequence, more UK users are shifting to overseas platforms, while founders are increasingly hesitant to build domestically. Kulechov said this dynamic threatens the UK’s ambition to position itself as a global crypto and fintech hub. He concluded that unless the regulatory framework evolves to reflect the realities of digital money, the UK risks falling behind countries that are moving more decisively toward blockchain-enabled finance.
Bank of England's Counterpoint on Stablecoin Regulation
Meanwhile, the Bank of England has issued its own warning on the topic, but from the opposite angle. Deputy Governor Sarah Breeden has said that adopting weaker stablecoin regulations could expose the UK’s financial system to significant instability, potentially triggering liquidity shocks or a credit crunch. She noted that as the country moves to integrate digital currencies into mainstream finance, regulators must account for a “different set of risks” emerging from new forms of money.