Finance
UK risks losing ground to rival fintech and crypto hubs, execs say
Workers cross a junction near the Bank of England (BOE) in the City of London, UK, on Tuesday, April 8, 2025.
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LONDON — Britain is at risk of losing budding fintech and cryptocurrency entrepreneurs to rival hubs if it doesn’t address pressing regulation and funding challenges, according to industry leaders.
Several crypto bosses told CNBC this week that the U.K. has created an unfavorable environment for fintech and crypto. They argued that the local regulator takes too strict an approach to registering new firms, and that pension funds managing trillions of pounds are too risk-averse
Whereas a decade ago the U.K. was seen as being at “the forefront in terms of promoting competitiveness and innovation,” today things “have shifted more towards prioritizing safety and soundness to an extent where growth has been held behind,” according to Jaidev Janardana, CEO of British digital bank Zopa.
“If I look at the speed of innovation, I do feel that the U.S. is ahead — although they have their own challenges. But look at Singapore, Hong Kong — again, you see much more rapid innovation,” Janardana told CNBC. “I think we are still ahead of the EU, but we can’t remain complacent with that.”
Tim Levene, CEO of venture capital firm Augmentum Fintech, said entrepreneurs face challenges attracting funding in the U.K. and could be tempted to start their founding journeys in other regions, like Asia and the Middle East.
“We’re scrambling around looking for pots of capital in the U.K., where currently it would be more fruitful to go to the Gulf, to go to the U.S., to go to Australia, or elsewhere in Asia, and that that doesn’t feel right,” Levene told CNBC.
Lisa Jacobs, CEO of business lending platform Funding Circle, said that the negative impacts of Brexit are still being felt by the U.K. fintech industry — particularly when it comes to attracting overseas talent.
“I think it is right that we’re paranoid about other locations,” she told CNBC. “It is right that we are trying to — as an industry, as government — make the U.K. still that great place to set up. We have all the ingredients there, because we’ve got the ecosystem, we do have this talent setting up new businesses. But it needs to continue. We can’t rest on our laurels.”
Crypto rules unclear
The U.K. is home to a vibrant financial technology sector, with firms like Monzo and Revolut among those scaling to become challengers to traditional banks.
Industry insiders attribute their rapid rise in part to innovation-friendly rules that allowed tech startups to apply for — and secure — licenses to offer banking and electronic money services with greater ease.
Businesses operating in the world of crypto are frustrated that the same hasn’t happened yet for their industry.
“Other jurisdictions have started to seize the opportunity,” Cassie Craddock, U.K. and Europe managing director at blockchain firm Ripple, told CNBC.
The U.S., for example, has adopted a more pro-crypto stance under President Donald Trump, with the Securities and Exchange Commission dropping several high-profile legal cases against major crypto businesses.
The EU, meanwhile, has led the way when it comes to laying out clear rules for the industry with its Markets in Crypto-Assets (MiCA) regulation.
“The U.S. is driving global tailwinds for the industry,” Craddock said, adding: “MiCA came into force in the EU at the end of last year, while Singapore, Hong Kong and the UAE are moving full steam ahead with pro-industry reforms,” she added.
The U.K. on Tuesday laid out draft proposals for regulating crypto firms — however, industry insiders say the devil will be in the detail when it comes to addressing more complex technical issues, such as reserve requirements for stablecoins.
Rules on stablecoins unclear
One area in particular where fintech and crypto leaders alike want to see more clarity is stablecoins, a type of cryptocurrency whose value is pegged to that of a sovereign currency.
Mark Fairless, CEO of payments infrastructure firm ClearBank, told CNBC that his business has been looking to develop its own stablecoin — but it’s been held back from launching one because of a lack of regulatory clarity.
Stablecoins are “part of our medium-term, longer-term strategy,” Fairless told CNBC. “We see ourselves well set up for that.” However, he added that a ClearBank stablecoin will only be possible when there’s regulatory certainty in the U.K. The startup is awaiting approval from the Bank of England.
Crypto industry insiders also say the FCA has been too restrictive when it comes to approving registrations from digital asset firms. The FCA is the regulator responsible for registering firms that want to provide crypto services within the scope of money laundering regulations in the U.K.
Last year, the watchdog published a roadmap detailing its plan to implement crypto regulation. The roadmap includes a series of discussion papers on topics ranging from stablecoins to crypto lending over the next two years. A full regulatory regime is expected to go live by 2026.
Another issue faced by crypto companies is that of being “debanked” by high street banks, according to Keith Grose, head of U.K. at Coinbase.
“Debanking is a huge issue — you can’t get bank accounts if you’re a company or individual who works in crypto,” Keith Grose, Coinbase’s U.K. head, told CNBC. “You can’t build the future of the financial system here if we don’t have that level playing field.”
A survey by Startup Coalition, Global Digital Finance and the U.K. Cryptoasset Business Council of more than 80 crypto firms published in January found that half were denied bank accounts or had existing ones closed by major banks.
“I think the U.K. will get it right — but there is a risk if you get it wrong that you drive innovation to other markets,” Coinbase’s Grose told CNBC.
“This is such a fast developing space — stablecoins grew 300% last year. They’re already doing more volume than Visa and Mastercard,” he added. “I think if you deliver smart regulation here, stablecoins can be a foundational part of our payment ecosystem in the U.K. going forward.”
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For the generation that should be in its “peak savings years,” the prospect of retiring on time has shifted from a plan to a prayer.
A newly released Employee Financial Wellness Survey by PwC found that nearly 50% of Gen X employees are pushing back their retirement dates, citing stagnant wages, rising everyday costs, and a lack of liquid savings.
Additionally, only 38% of Gen Xers believe they can retire when they originally planned, and more than half of this demographic expect to withdraw funds from their retirement accounts early to cover short-term costs.
“For employers, this isn’t a future problem. Financial anxiety during peak career years can affect focus and engagement,” PwC researchers write. “If the risks are clear, the question is why more employees aren’t taking action. It’s not a lack of desire. Most employees want stability, confidence and to feel in control. But many don’t feel equipped to get there.”
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The primary driver of this retirement delay is the inability to save as inflation eats away at monthly expenses, the report notes. Twenty-five percent of the total workforce is living without a buffer, and nearly half cannot meet basic household expenses.
Nearly half of Gen X workers are delaying retirement, PwC reports. (Getty Images)
“[Forty-nine percent] say their compensation isn’t keeping up with costs. As expenses rise faster than income, day-to-day trade-offs are becoming routine. Employees aren’t just feeling squeezed. They’re making difficult financial decisions to stay afloat,” the PwC report continues..
As a result, when Gen Xers cannot afford to leave their current jobs, the entire corporate ladder stalls, creating business risks, with companies facing higher costs as older talent remains on payroll longer than expected.
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“When employees dip into retirement funds early or delay retirement altogether, it affects more than personal finances and retirement plan leakage,” the report says. “It may also influence workforce planning, healthcare costs, succession timing and overall organizational stability.”
The findings also show that a significant portion – 41% – of the workforce feel they were never given the tools to manage a crisis of this magnitude, leading to a sense of being “overwhelmed” by financial choices.
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PwC provided a call to action for employees and their employers, encouraging them to reduce the stigma around financial education, foster trust through human coaches, emphasize skill building and focus on day-to-day finances before long-term goals.
“Employees define financial wellness simply: less stress, fewer surprises and the freedom to make financial choices with confidence. For employers, that’s the opportunity.”
Cybersecurity and enterprise software stocks have been market dogs in 2026, with fears that AI will wipe out a wide range of companies in the enterprise space dominating the narrative. But they snapped a brutal losing streak this past week, joining in the broader market rally that saw all losses from the U.S.-Iran war regained by the Dow Jones Industrial Average and S&P 500.
Cybersecurity has been “a victim of some of the AI-related headlines,” Christian Magoon, Amplify ETFs CEO, said on this week’s “ETF Edge.”
It wasn’t just niche cybersecurity names. Take Microsoft, for example, which was recently down close to 20% for the year. Its shares surged last week by 13%.
A big driver of the pummeling in software stocks was a rotation within tech by investors to AI infrastructure and semiconductors and some other names in large-cap tech, Magoon said, and since cybersecurity stocks and ETFs are heavily weighted towards software companies, they were left behind even as those businesses continue to grow on a fundamental basis.
But Wall Street now has become more bullish with the stocks at lower levels. Brent Thill, Jefferies tech analyst, said last week that the worst may be over for software stocks. “I think that this concept that software is dead, and then Anthropic and OpenAI are going to kill the entire industry, is just over-exaggerated,” he said on CNBC’s “Money Movers” on Wednesday.
“Big Short” investor Michael Burry wrote in a Substack post on Wednesday that he is becoming bullish about software stocks after the recent selloff. “Software stocks remain interesting because of accelerated extreme declines last week arising from a reflexive positive feedback loop between falling software stocks and changes in the market for their bank debt,” he wrote.
The Global X Cybersecurity ETF (BUG), is down about 12% since the beginning of the year, with top holdings including Palo Alto Networks, Fortinet, Akamai Technologies and CrowdStrike. But BUG was up 12% last week. The First Trust NASDAQ Cybersecurity ETF (CIBR) is down 6% for the year, but up 9% in the past week.
Piper Sandler analyst Rob Owens reiterated an “overweight” rating on Palo Alto Networks which helped the stock pop 7% — it is now down roughly 6% on the year. Its peers saw similar moves, including CrowdStrike.
Performance of Global X cybersecurity ETF versus S&P 500 over past one-year period.
Magoon said expectations may have become too high in cybersecurity, and with a crowding effect among investors, solid results were not enough to to push stocks higher. But the down-and-then-back-up 2026 for the sector is also a reminder that when stocks fall sharply in a short period of time, opportunity may knock.
“Once you’re down over 10% in some of these subsectors, you start to see the contrarians start to say, ‘well, maybe I’ll take a look at this,'” Magoon said.
He said AI does add both opportunity and uncertainty to the cybersecurity equation, increasing demand but also introducing new competition. But he added, “I think the dip is good to buy in an AI-driven world,” specifically because the risks to companies may lead to more M&A in cyber names that benefits the stocks.
For now, investors may look for opportunity on the margins rather than rush back into beaten-up tech names. “I think investors are still going to remain underweight software,” Thill said.
But Magoon advises investors to at least take the reminder to keep an eye on niches in the market during pronounced downturns. “The best-performing are often the least bought and do the best over the next 12 months versus late-in-the-game piling on,” he said.
While that may have been a mindset that worked against the last investors into cybersecurity and enterprise software in mid-2025 when the negative sentiment started building, at least for now, it’s started working for the stocks in the sector again.
Meanwhile, this year’s biggest winner is also a good example of what can be an extended trade in either a bullish or bearish direction. Last year, institutional ownership of energy was at multi-year lows, Magoon said, referencing Bank of America data. “Reverse sentiment can be a great indicator,” he said.
But he cautioned that any selective buying of stocks that have dipped does have to contend with the risk that there is a potentially bigger drawdown in the market yet to come in 2026. That is because midterm election years historically have been marked by large drawdowns. “If you think it is bad right now, it could get a lot worse,” Magoon said. But he added that there’s a silver-lining in that data, too, for the patient investor. The market has posted very strong 12-month returns after midterm election drawdowns end. So, for investors with a longer-term time horizon and no need for short-term liquidity, Magoon said, “stick in there.”
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New innovation in the exchange-traded fund industry could come at a cost to investors during extreme conditions.
According to MFS Investment Management’s Jamie Harrison, ETFs involved in increasingly complex derivatives and less transparent markets may be in uncharted territory when it comes to violent downturns.
“Those would be something that you’d want to keep an eye on as volatility ramps up,” the firm’s head of ETF capital markets told CNBC’s “ETF Edge” this week. “As innovation continues to increase at a rapid pace within the ETF wrapper, [it’s] definitely something that we advise our clients to be really front-footed about… Lack of transparency could absolutely be an issue if we’re going to start seeing some deep sell-offs.”
His firm has been around since 1924 and is known for inventing the open-end mutual fund. Last year, ETF.com named MFS Investment Management as the best new ETF issuer.
“It’s important to do due diligence on the portfolio,” he said. “Having a firm that has deep partnerships, deep bench of subject matter experts that plays with the A-team in terms of the Street and liquidity providers available [are] super important.”
Liquidity as the real issue?
Harrison suggested the real issue is liquidity, particularly during a steep sell-off.
“We’ve all seen the news and the headlines around potential private credit ETFs. That picture becomes much more murky,” he added. “It’s up to advisors, to investors [and] to clients to really dig in and look under the hood and engage with their issuers.”
He noted investors will have to ask some tough questions.
“What does this look like in a 20% drawdown? How does this liquidity facility work? Am I going to be able to get in? Am I going to be able to get out? And if I’m able to get out, am I able to get out at a price that’s tight to NAV [net asset value], and what’s the infrastructure at your shop in terms of managing that consideration for me,” said Harrison.
Amplify ETFs’ Christian Magoon is also concerned about these newer ETF strategies could weather a monster drawdown. He listed private credit as a red flag.
“If your ETF owns private credit, I think it’s worth taking a look at, kind of what the standards are around liquidity and how that ETF is trading, because that should be a bit of a mismatch between the trading pace of ETFs and the underlying asset,” the firm’s CEO said in the same interview.
Magoon also highlighted potential issues surrounding equity-linked notes. The notes provide fixed income security while offering potentially higher returns linked to stocks or equity indexes.
“Those could potentially be in stress due to redemptions and the underlying credit risk. That’s another kind of unique derivative,” Magoon said. “I would very closely look at any ETF that has equity-linked notes should we get into a major drawdown or there be a contagion in private credit or something related to the banking system.”
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