Bitcoin is infrastructure now. Why does the UK still regulate it like a speculative risk?

If you look at how Bitcoin is actually being used in 2026, the reality is very practical, even mundane. Bitcoin today isn’t about volatile trading or “going to the moon.” It is increasingly used as financial infrastructure.

Through the Lightning Network, Bitcoin has quietly evolved into a high-speed, low cost settlement layer. It operates in the background of checkout systems and consumer apps, letting users pay in one currency while merchants receive another, with near instant settlement. When platforms like Square, Strike, or Cash App integrate these rails, most end users are barely aware that Bitcoin is involved at all. They just know the transaction’s been completed.

Yet, in the UK, it’s still treated like a risky speculative asset rather than core infrastructure.

The “crypto” trap

The UK’s regulatory approach struggles with a category mismatch. Bitcoin continues to be grouped with the broader “crypto” label, meaning rules designed for speculative tokens are applied to decentralized payment software.

The distinction is important. Most “crypto” assets have issuers, governance structures, and marketing designed to generate returns. Bitcoin has none of these. It is an open-source network with no central authority and no promised profit.

Treating a decentralized payment rail like a speculative investment creates unnecessary friction. In the UK, a startup looking to use Bitcoin to settle a micropayment or a loyalty reward faces the same compliance requirements, investor classification tests, and risk disclosures as a high-risk investment product.

This approach makes it challenging to build low-value, high-volume payment applications efficiently, as the compliance costs per transaction can exceed the transaction itself.

Innovation is portable

This rigid approach is already having economic consequences in the UK. While the country debates how to handle “crypto,” other jurisdictions are moving ahead with frameworks that recognize the difference between an asset and a rail.

The European Union’s MiCA regulation creates a clear framework for payment tokens and decentralized assets. The United States is approving Exchange Traded Products and distinguishing between commodities and securities. These frameworks are far from perfect, but they offer something the UK currently lacks: nuance.

For founders, it’s a simple calculation. If you are building payment infrastructure, you go where the rules understand payments. We’re seeing businesses that could be based in the UK instead choose Europe or the US, where regulation is more proportionate. They still follow standard anti-money-laundering and safeguarding rules, but they aren’t treated like high-risk investment products, giving them the freedom to build practical payment solutions.

The economic stakes

Financial and insurance services underpin roughly 8% of the UK’s GDP. The country’s economic strength relies heavily on its reputation as a global hub for financial innovation.

If the future of payments is real-time and internet-native, the UK can’t afford to treat the infrastructure that enables it like a speculative gamble. By regulating Bitcoin the same way as high-risk crypto tokens, the country risks missing out on the next generation of payment networks.

Regulation that matches the risk

Fixing this doesn’t require a complete rewrite of the law. It requires proportionality. In traditional finance, we don’t regulate a coffee purchase with the same scrutiny as a high value stock trade. We scale the rules based on risk, custody, and exposure.

The UK needs to apply that same logic here. If a business is using Bitcoin purely for settlement, and the consumer isn’t holding the asset for speculation, the rules should reflect that. We need a framework that focuses on activity rather than technology.

The tools to make this happen exist, and the talent is ready. But unless the UK updates its definition of Bitcoin, that economic value will simply move elsewhere.

Disclosure: Ben Cousens is CEO of Antidote, a London-based Bitcoin-focused incubator, and Chief Strategy Officer at ZBD, a payments company that uses Bitcoin’s Lightning Network as part of its infrastructure. His views are informed by professional experience in financial technology and payments.