In recent weeks, momentum has been building toward a system that could allow crypto firms regulated in the U.S. and U.K. to more easily operate across both jurisdictions. This effort is being pushed by regulators, finance ministries, and industry groups who argue that a “crypto passporting” framework would reduce red tape, improve market access, and better protect consumers in a sector where transactions cross borders by default.
The idea is simple in concept but complex in execution: licensed crypto firms in one country could operate in the other without going through the full, often duplicative, authorization process. For example, a U.K. exchange or crypto service provider regulated under U.K. rules could access the U.S. market more directly, and vice versa. That would require a high degree of regulatory alignment and mutual recognition of standards around licensing, supervision, anti-money laundering, custody, cybersecurity, and consumer protection.
One of the loudest voices lately has been Adrienne Harris, the outgoing Superintendent of the New York State Department of Financial Services (NYDFS). In her final statements before departing, she explicitly supported the idea of passporting between the U.S. and U.K. Her view is that because crypto markets are by nature “borderless,” national regulators must find ways to cooperate more closely. She stressed that a well-organized passporting scheme could strengthen investor safeguards, reduce the compliance burdens on firms, and enhance cross-border market interoperability.
On the UK side, there has been parallel movement. The U.K. government, through the Treasury and other bodies, has been pushing for regulatory rules for crypto-assets that aim both to protect consumers and to support innovation. High-level meetings between UK Chancellor Rachel Reeves and U.S. Treasury Secretary Scott Bessent have resulted in the creation of the Transatlantic Taskforce for Markets of the Future. This task force is charged with exploring how to reduce regulatory barriers in capital markets and improve cooperation, including in digital assets.
Industry trade groups have also added their voices. For example, the UK Cryptoasset Business Council has said that coordinated regulation, including passporting, could make cross-border markets more interoperable and reduce duplication of compliance effort. Firms operating in both jurisdictions often find themselves subject to two sets of similar but slightly different rules, which increases costs and slows growth.
If this idea moves from discussion to implementation, here’s how it might work in practice:
First, both jurisdictions would need to agree on common regulatory standards. That means aligning things like licensing requirements for exchanges, custodians, wallets; rules for stablecoins; disclosures; risk management; cybersecurity; anti-money laundering; consumer protection; and governance.
Second, there would need to be mutual recognition or equivalence. If a firm is registered and supervised in New York under rules that the U.K. finds acceptable, then U.K. regulators would grant it some permission to operate in the U.K. under a lighter or streamlined process — perhaps simply notifying rather than applying for a full permit. And vice versa.
Third, oversight and enforcement would still need to be robust. Even with passporting, regulators would want to ensure firms follow local rules, report incidents, maintain transparency, and protect user assets. There might be coordination on cross-border enforcement actions.
Fourth, there needs to be clarity about which kinds of firms or business models qualify. Whether decentralized finance (DeFi) protocols, staking providers, stablecoin issuers are included; whether retail or institutional business is treated differently; how jurisdictional boundaries are defined. Some services are more regulated, others less so, and the gaps would need to be addressed.
There are several clear benefits that supporters emphasize.
Reducing regulatory friction is near the top. Many crypto firms find it expensive and time-consuming to satisfy two sets of rulebooks. Passporting could streamline that, making it cheaper and faster to enter new markets.
Improved investor protection is another argument. If regulations are closely aligned, oversight increases, and users may have more predictable legal rights in either jurisdiction.
It might also foster innovation and competition. Firms could scale across borders more easily, allowing them to invest more confidently in infrastructure, products, and services that serve both markets.
For the U.K., this could help restore some of its international competitiveness in finance post-Brexit. Becoming a more attractive location for crypto firms depends heavily on regulatory certainty and market access. The promise of easier access to the large U.S. market is an incentive. For the U.S., aligning with a major financial center like London may help attract foreign firms, support capital inflows, and strengthen the U.S.’s central role in global financial innovation.
While the benefits are real, so are the obstacles.
One of the biggest challenges is regulatory divergence. Even with good intentions, the U.S. and the U.K. have historically differed on how they classify crypto assets (security vs commodity), how strict they are on things like stablecoin regulation, consumer protections, and enforcement. Harmonizing all of that is difficult.
Another issue is legal and jurisdictional risk. If a U.K.-licensed firm operating in the U.S. under passporting breaks a rule or fails, who is responsible? Which laws apply? How easy is it to cross-enforce legal judgments? Differences in court systems, liability rules, regulatory penalties complicate matters.
Technical and operational risk also matters. Ensuring compliance in areas like anti-money laundering, cybersecurity, real-time monitoring, proof of reserves etc., might require firms to upgrade systems and policies. The cost savings from passporting might be offset by costs of harmonizing infrastructure.
Public policy and political risk is an underappreciated factor. If either country changes course — new leadership, changes in regulatory philosophy, scandals, crypto-asset losses — momentum could be lost or reversed. Passporting might depend on stable political alignment or legal frameworks that survive changes in government.
Finally, consumer trust is key. If firms under passporting misbehave, consumers may suffer, and regulatory backlash could follow, hurting the reputation not only of those firms but of passporting schemes as a whole.
As of now, the idea of passporting is still largely in discussion and exploration rather than formal implementation.
The Transatlantic Taskforce for Markets of the Future has been set up by U.S. and U.K. finance officials, with mandates to deliver a report within a specified timeframe (180 days) on how to enhance collaboration in digital assets and capital markets. Among the topics it is expected to explore is what passporting might look like.
Adrienne Harris’s public endorsement of the idea has given it more credibility, especially coming from someone who has overseen significant crypto regulation in New York and who is stepping down. Her comments likely reflect broader regulatory recognition that something has to give; the current patchwork of rules and duplicative oversight has real costs.
On the U.K. side, draft legislation and policy statements show interest in regulatory clarity, cooperation, and giving firms some certainty. U.K. officials have publicly committed to aligning regulation with innovation goals and working with international partners. These are signs that passporting isn’t a fringe idea, but more a potential policy direction.
Several developments will be crucial to see whether US-UK crypto passporting can become real rather than just rhetoric:
- The report from the Transatlantic Taskforce. What concrete proposals will it offer? Will it identify equivalency in licensing standards, supervision, enforcement? Will it propose pilot or transitional mechanisms?
- Legal changes or regulatory orders in both countries that align with cooperation. For example, will U.K. laws recognize certain U.S. licenses, or vice versa, at least for certain crypto businesses?
- Specific industry reactions. Will crypto exchanges, stablecoin issuers, custody providers, payment firms start preparing for dual jurisdiction operations? Will they lobby for clarity or start reworking compliance frameworks anticipating passporting?
- Enforcement precedents and demonstrations of mutual cooperation. For instance, sharing information on fraud, money laundering, or cybersecurity issues, coordinated audits or investigations, etc. These will build trust between regulators.
- How standards around risk (stablecoins, consumer protection, reserves, custody, AML) are defined. If one country significantly lags the other in those, there may be resistance.
The US-UK crypto passporting idea is gaining serious traction. With outgoing U.S. regulators publicly supporting it, and official taskforces being established, the groundwork is being laid for what could be a landmark in crypto regulation. If done well, passporting could reduce costs, simplify compliance, and help crypto firms scale across two of the world’s biggest markets. If done poorly, or without adequate alignment, risk, consumer harm, or legal confusion might follow.
What we are seeing now is more than talk—it is a policy direction. Whether it becomes a binding framework will depend on political will, regulatory alignment, industry readiness, and trust. The coming months may be decisive in determining whether US-UK passporting becomes a reality or remains a promising idea.