What impact Britain’s exit from the European Union will have on Bitcoin and Fintech?
The British have always seen themselves as a bit distinct from their European cousins across the Channel.
Indeed, Britain is probably more similar to Canada, Australia, New Zealand and even the United States than what lies 20 miles away in Europe.
However, the UK joined the European Economic Community on January 1, 1973 and since then has had a complicated relationship with its successor the European Union (EU). Now the British public finally gets a chance to decide for once and all if they want In or Out of the EU and the referendum for that is set to take place on Thursday, June 23, 2016.
How will this EU referendum affect Bitcoin and the wider Fintech industry in the UK and beyond?
Britain as a financial hub
Britain has traditionally and historically been known for its financial services industry. The City of London is a 1.12 square mile area with a population of 7,375 people and is often referred to just as ‘The City’.
According to the City of London’s website, there is US$ 2.7 trillion worth of foreign currency exchange daily turnover or 41 per cent of the world’s global foreign currency exchange. The City alone vies as a global financial hub. It comes as no surprise then that a great deal of Bitcoin business is placed in the UK as well.
According to a report by Ernst & Young and HM Treasury, the UK Fintech sector generated £6.6 bn worth of revenue in 2015 alone.
The report says, “London ranks first in terms of the scale and competitiveness of its financial centre, with the world’s highest concentration of global institutions across banking, asset management, insurance and trading sectors. This concentration of FS activity represents an exceptional platform for FinTech solutions, particularly in the trading, regulatory, data and compliance space, which is only comparable to New York.”
Brexit as an existential threat for FIntech
Companies based in the UK have unfettered access to the european markets. However, if Brexit does take place and Britain decides to say goodbye to the EU, things will become murky. It could be possible that companies which are operating at the moment without any issues, may have more difficulty finding access to the markets in European Union countries. It would, however, depend on the kind of post-exit deal which Britain can negotiate with the European regional block.
Recently Reuters published a story where they interviewed 10 Fintech companies, 7 of which said they would consider moving their headquarters in case Brexit does materialise. Reuters also mentioned that more people work in Fintech in Britain than countries such as Singapore, Hong Kong, Germany and Australia combined. One thing that can be said for certain that access to the European market is a factor which matters for the Fintech industry.
What will happen to Bitcoin?
A good question is what will happen to Bitcoin should Britain decide to give the EU the good old heave-ho.
Marc Warne, founder of Bittylicious, a Bitcoin exchange company based in the United Kingdom, has this to say:
“Bitcoin as a currency is totally decoupled from any physical location. I believe this will only affect Bitcoin indirectly in that people and businesses might lose confidence in the future of UK business, and in turn the pound, so might look towards alternative investments. Bitcoin is a possible alternate investment, and also Bitcoin startups often accept Bitcoin directly as a source of funding. Bitcoin may be viewed in a positive light as being more stable in this regard as it is not directly affected by governmental decisions.”
Mark Lamb, Co-founder of Coinfloor is perhaps right in saying:
"It's hard to determine the impact of "Brexit" on the UK bitcoin market and the GBP/BTC price, there are arguments for it being positive, negative or irrelevant."
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