The UK’s new crypto regime is a major milestone. But competitive advantage will come from building credibility, not merely regulating today’s visible crypto market.

With the publication last month of the Financial Conduct Authority’s (FCA) cryptoassets regime policy statements, the UK has reached an important milestone in its regulation of the virtual asset industry. After years in which policy debates have oscillated between enthusiasm for innovation and concern about criminal misuse, the question is now whether the UK can ensure effective regulation without stifling responsible innovation or leaving material risks to grow in the shadows.

The package represented by the statements is…