Brexit May Prove a Blessing in Disguise for UK Crypto Industry

U.K. crypto executives are cautiously optimistic about the country’s prospects of becoming a global crypto hub following recent initiatives to prevent more firms from leaving the country.

Last month, Her Majesty’s Treasury announced its intention for the U.K. to become a “global crypto hub,” in response to similar efforts being made by places like Switzerland and Dubai. 

And recently, the Economic Secretary to the Treasury John Glen, the government’s de facto crypto czar, has been meeting with executives and policy-makers in San Francisco, Washington, Brussels, Madrid, and Luxembourg. 

Glen is next expected to visit the “Crypto Valley” of Zug in Switzerland, a country whose regulatory independence from the EU has enabled it to enact these crypto-friendly policies. 

“Whatever you thought about Brexit, we’re now seizing the opportunity that comes from it,” Glen said recently. “This regulatory freedom is critical.”

Brexit opportunity

Despite initially hampering efforts, these executives now believe that the independence afforded by Brexit may actually have contributed to the country’s current efforts. 

“There’s a real opportunity, for the first time post-Brexit in particular, for crypto to have legislation that will enable all of its key ambitions,” Blair Halliday, the U.K. head of cryptocurrency exchange Gemini, told Bloomberg. 

Amid the regulatory overload created by the U.K’s exit from the European Union in 2016, a framework for digital assets became a low priority. 

However, once regulators began taking notice, they sought to regulate cryptocurrencies similarly to traditional financial services, threatening to stifle innovation, and sending fledgling crypto companies abroad. 

“A lot of these companies are quite global, and they can relocate to wherever is the most preferable location,” said Diana Biggs, chief strategy officer at crypto ETP provider DeFi Technologies

FCA about-face

Yet, as the EU introduces tougher regulations governing crypto transfers, Brexit has now afforded Britain an opportunity that officials have recently moved to seize on. 

Earlier this year, the U.K.’s Financial Conduct Authority (FCA) said it would impose tougher rules on crypto marketing, while its temporary registration regime for digital-asset firms resulted in over 80% of applicants either withdrawing their bids or being rejected.  

Now, the FCA is looking to establish clearer rules for crypto assets, as well as regulations for issuers of stablecoins. Earlier this week, the FCA held a two-day event during which officials sought feedback from executives, academics, and stakeholders on how to better regulate the industry.  

Gemini’s Halliday acknowledged that the country is “a better place than ever” to reverse that trend. 

“They’re at a point where they’re not stymied or held back by having to consider these transitional agreements and arrangements,” he said. “The foundation is there. Now they’re able to assess what the landscape is in financial services, and really push on.