Opinion by, Joe Jowett, CEO and co-founder of StrikeX
It’s no secret that the crypto world is growing – and fast. With an estimated 300m crypto users worldwide, the market looks set to grow to USD 2.2bn by 2026. In the UK alone, some 33% of the public own cryptocurrency assets, with the number of cryptocurrency holders doubling since 2018. Disrupting traditional currencies and markets, the boom hasn’t come without its challenges, from concerned central banks to more wary traditional financial institutions and market upheavals, such as the recent fall of the TerraUSD stablecoin. But with the industry worth a mighty £1.64 trillion globally, the UK needs to keep up with the competition and act now to demonstrate its hospitality towards cryptocurrency, or else it could miss out on this lucrative, capital-generating market.
In what some cynics have dismissed as ‘too little, too late’, the Chancellor of the Exchequer signalled just last month his intention to turn the UK into a “global hub” for crypto, with plans to recognise stablecoins and digital assets tied to the price of real-world assets as a valid form of currency.
The Chancellor has told the Royal Mint to make an NFT as part of plans to make the UK a global hub for cryptoasset technology, and a “sandbox” permitting start-ups to innovate under the careful guise of regulators to speed acceptance was also announced. But it will take more than that if the UK wants to distinguish itself as a revolutionary and empowering centre for crypto.
Whilst this latest government announcement may provide a degree of relief to the industry, actions mean more. With most cryptocurrencies paired with USD backed stablecoins, across the pond there has been a concerted effort to regulate cryptocurrencies. Biden recently ordered the most wide-reaching effort by the federal government to study and potentially regulate cryptocurrencies – an initiative that could see regulators closer to permitting spot cryptocurrency ETFs on the US markets.
And it’s not just competition from overseas that presents a challenge. Within the UK, vocal concern by the public sector and policymakers around safety, regulation and apathy towards the crypto industry has understandably left investors wary of investment in Britain, instead turn to developing markets with less regulatory red tape across Latin America, Africa and Southeast Asia.
To attract those investors keen on crypto, the UK must commit to investment in a regulatory framework that fosters the national crypto economy and safeguards it without throttling innovation and killing competition. Promisingly, the Treasury already appears to want to make tangible progress, with one of its proposals aimed at adapting existing laws that govern electronic money, such as funds stored on mobile phone apps, to cover stablecoins, bringing them under the purview of the Financial Conduct Authority.
The UK can’t afford to ignore the adoption of blockchain technology, which is growing at an increasingly rapid rate, coupled with the significant number of crypto holders (some 61%) planning to expand their portfolios in the next 12 months. The UK is also home to over 200 blockchain-driven software companies.
What’s more, many British investors consider digital currencies an essential tool for portfolio diversification, with cryptocurrencies a way for investors to earn yield and NFTs increasingly popular across industries including gaming, real estate, and the arts.
Britain is, however, far from amateur when it comes to investment, innovation, and technology. The UK has a proud history of attracting investment, namely thanks to the strong rule of law, highly educated workforce, attractive corporate tax bracket, and flexible labour markets. With a highly skilled, tech-savvy workforce, the UK is in a strong position to capitalise on sophisticated jobs. These include blockchain engineers and cryptocurrency developers in industry which is growing, contrasting with relentless cost-cutting taking place in traditional financial services industries.
With the UK already well positioned as a global tech powerhouse, the digital tech sector makes essential contributions to the local economy and attracts investment both internally and from overseas. Clusters built around AI, cyber security, machine learning and fintech are supporting growth, jobs, and productivity in communities across the UK, attracting global investment in the process. Blockchain is the next step in the UK’s continued growth in the digital economy , and it is essential that a world-class infrastructure is built, with regulation proportionate to risk, to boost the modern 21st century economy and allow crypto to thrive.
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