Brexit, Bitcoin, and Fintech industry – How will the UK adapt to change?

Brexit, Bitcoin, and Fintech industry – How will the UK adapt to change?

After the appointment of Boris Johnson, a confirmed Brexiteer, as the new Prime Minister of the UK, the debate, surrounding what will happen after a “no-deal” Brexit occurs in late October, has resumed with a vengeance. Opinions are all over the map, but of close concern to all crypto enthusiasts is how will Bitcoin and the Fintech industry be impacted? Opinions in this arena also vary, but tend to be a bit more focused. The general thinking is that Bitcoin will benefit from “safe haven” status, while the Fintech industry will be in flux until the dust settles on a new equilibrium.

The impact on Bitcoin prices is the easier of the two assessments to make, since its “safe haven” status has been a current theme running through several articles after August witnessed a bolt forward by BTC, when geopolitical tensions escalated. The correlation has been demonstrative, as weak hands in the international equity sector began shifting positions, when Trump stoked up trade wars with China. The Yuan weakened, causing Chinese investors to chase after Bitcoin as best they could.

Nicholas Gregory, CEO of blockchain firm CommerceBlock, is one of many voices that also believes that a “no-deal” Brexit could propel Bitcoin up the charts, so to speak:

Not only will a no-deal departure from the EU create turmoil and volatility across two major fiat currencies, it will also trigger an identity crisis for the global system as the contingency and vulnerability of major global fiat currencies is laid bare.

Gregory also does not see the wave of populism and geopolitical uncertainty subsiding anytime soon:

Come 2020, we expect an increasingly populist and politically unstable world to cement the safe haven status of Bitcoin and other cryptocurrencies more generally. And if central banks revert to ramping up the money printing all over again, the case for cryptocurrencies like Bitcoin, whose supply is capped, will be further reinforced.

The impact on the Fintech industry of a “no-deal” Brexit is a bit more difficult to ascertain, since there are quite a few more moving parts that factor into the overall equation. While notable firms like JPMorgan Chase have relocated to the continent, there has not been a rush to the exits. There are reports that the Fintech talent pool is declining and that a few firms have moved to the EU ahead of Brexit, but Fintech fundraisings, according to KPMG, have risen 55% in the UK since 2015. A consensus narrative has yet to form, as observers argue the possibility of both positive and negative outcomes.

Nick Botton, consultant at Landmark Public Affairs, takes the negative view that a significant downturn could happen. Access to EU markets would recede. The Pound could suffer greatly, causing more Fintech relocations, and the ones left behind would be under severe constraints that could detrimentally hamper the funding of innovative developments:

All this, mixed with weaker recruitment opportunities, less access to funding and technology (because of new import barriers), means that the U.K.’s status as an attractive destination for fintech startups will be severely harmed.

Jane Thomason, CEO of Fintech Worldwide, contends that UK’s leadership position will not decline:

Just as the U.K. is the financial capital of the world, London is the fintech capital of Europe, only lagging behind China and the U.S. in terms of global placement. The strength of the U.K.’s position is built on three key factors: U.K. financial services, the nature of U.K. customers and the U.K. regulatory environment.

She further notes that:

Investors put more money into U.K. fintech than any other European country in 2018. Fintech thrives in London, for the financial sector is uniquely located alongside a booming technology sector — something uncharacteristic of Silicon Valley, Route 128 or Wall Street. This provides an overlap of local financial and tech savvy talent.

Antoine Baschiera, co-founder and CEO of Early Metrics, concludes:

Nevertheless, the U.K. remains the most welcoming country for fintechs in terms of regulatory framework, so regardless of how Brexit unfolds, it will maintain a certain competitive edge over its EU neighbors. But for how long?

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