With more than enough of our own political highs and lows to occupy our headlines, the vagaries of British politics don’t often win the spotlight at South African dinner tables.
By Nic Haralambous, chief operating officer of Coindirect
But the looming Brexit deadline has definitely held my attention as we wait for finality on what it means for fintech businesses like Coindirect, which operate globally and have offices in London.
Doing business in London has for years held key benefits for both non-UK and UK financial technology startups; chief among them being the ease at which they are able to set up and scale in terms of regulation, tax, and infrastructure. However, many of these businesses are already looking to make an exit from the UK to mitigate fallout from Brexit as they face restricted access to skilled workers as well as loss of access to the EU single market.
The uncertainty has plunged the UK’s financial sector into turmoil that will increase in severity in the near future, and certainly be difficult to recover from. But cryptocurrencies as they exist – digital, borderless, and global – have the ability to reboot the UK’s financial woes.
How? Once the UK has been moved (or booted) out of the EU, the country will have the opportunity to independently establish rules and regulations for various verticals, among them, cryptocurrencies. Instead of treading with caution as many other EU countries have done, the UK can and should align itself with crypto-friendly jurisdictions like Switzerland and Japan to place itself ahead of the game. This would immediately make the UK attractive to fintech startups and entrepreneurs looking to build out their futures.
Bank of England’s governor Mark Carney remarked earlier this year that a digital currency “could dampen the domineering influence of the US dollar on global trade”. This is a positive sign that authorities in the UK could look to cryptocurrencies for their value as a currency rather than just as a safe haven asset. Thinking of Bitcoin solely as a safety asset is a missed opportunity. Its real value is in its power as a currency, and its ability to work as a secure financial solution without limits.
The more we actively adopt blockchain and crypto technology and show its value beyond niche jargon and Bitcoin mania, the higher up on the priority list it will move for authoritative bodies to address and intelligently regulate.
Moreover, cryptocurrencies are politically neutral and thus remain above the noise when a leading fiat currency hits a slump as the result of political uncertainty – to wit, the US-China trade troubles that gave Bitcoin a boost earlier this year. The Pound will take a hit once Brexit is actioned, and it will be up to SMEs across the UK to bolster their economy.
The prospect of Brexit being reversed entirely is low, but businesses in the UK can use cryptocurrency and blockchain as a solution to the challenges created by Brexit as well as a means for innovation with their newfound freedoms from the EU.
London’s thriving global Fintech scene can ensure that the city retains her title as the world’s largest and most important financial hub, if they are willing to instigate change. If we believe as ardently as we say we do that cryptocurrency is the future of money, then it’s moments like this that we should seize to put the nails into the coffin for traditional banking and fiat currencies.
Now more than ever, fintech companies in the UK need to innovate ruthlessly, and fearlessly.
Brexit, with the current deal, a new deal, or no deal at all, will happen and when the time comes London will either live up to her status and emerge remade, or will simply fail to seize the moment.