Although the sector is skeptical, Britain hopes to replace the U.S. as a global center for cryptocurrency.

LONDON— Britain is making a new attempt to establish itself as a global center for cryptocurrency, but it will have a difficult time doing so given opposition from regional business owners and competition from the United States under President-elect Donald Trump.The Labour government in Britain has pledged to create a welcoming atmosphere for companies involved in blockchain and cryptocurrency-related ventures.The government wants to work with companies on draft legal measures for digital assets, such as stablecoins, which are tokens based on the value of sovereign currencies, "as early as possible next year," according to a recent speech by U.K. Economic Secretary to the Treasury Tulip Siddiq.Additionally, she stated that the government would not consider cryptocurrency staking services—which pay out on users' token holdings—to be collective investment schemes.

Insiders in the cryptocurrency sector were concerned that such a treatment would have resulted in onerous regulatory requirements. At an event last week hosted by the U.K. branch of Coinbase-backed advocacy group Stand With Crypto, Britain's investment minister, Poppy Gustafsson, stated, "This is a sector with enormous potential and a sector that's already playing a central role in the U.K.'s vibrant tech landscape." According to Gustafsson, the government is "already taking decisive steps to support this sector and ensure that we remain at the forefront of this global innovation" and is "committed to fostering and embracing blockchain."