These days, there has been quite a bit of activity in the UK financial sector, worth paying attention to.

Last week, the Bank of England announced its fourth interest rate cut this year, a frequency that is already quite high. What does a rate cut mean? The returns on money placed in traditional banks are shrinking, and funds will inevitably look for new channels to appreciate. At this moment, UK regulators quickly responded.

The UK Treasury and the Financial Conduct Authority (FCA) recently announced an updated regulatory framework for crypto assets. It appears to add restrictions, but in fact, it integrates the crypto market into the mainstream financial system. The new framework requires trading platforms to have on-chain monitoring capabilities and measures to prevent market manipulation. While this indeed raises the entry barriers, it also means that compliant platforms receive official endorsement.

From a macro perspective, this is a tightly coordinated operation. The central bank releases liquidity, regulators simultaneously improve the framework, and both work together to pave the way for large capital inflows into the crypto market. The official channels are established, and psychological barriers are thus eliminated.

According to the plan, this framework is expected to be fully implemented by 2027. This provides institutional investors and traditional capital with ample preparation time. When the policies are truly implemented, we may see a large-scale influx of funds.

As a Western financial hub, the ripple effect of this signal could be widespread. Other major European economies and North American markets are observing this experiment. If the UK model proves successful, replication is highly likely.

What do you think of this trend? Share your thoughts in the comments.