The UK’s mission to become a ‘crypto hub’ has so far fallen short, but the appointment of Tulip Siddiq as Economic Secretary to the Treasury, or City Minister, signals a move toward a more progressive approach to crypto and digital currencies. The new City Minister has been an advocate for Blockchain technologies and crypto, so long as they are properly regulated. If the UK is to take steps to create a well-regulated and world-leading crypto industry, it should look to the successes of British FinTech.
With the decline of cash in the UK, innovative solutions developed by FinTechs have revolutionised the payments market. A joint report by UK Finance and Accenture revealed a surge in payments using Apple Pay and Google Pay due to their enhanced security and looser spending limits. The seamless, secure nature of digital wallets has led to a surge in popularity, opening the door to integration with other financial services, such as financial planning or cryptocurrencies.
Commenting on the potential of the UK crypto industry, Jeremy Baber, CEO of Lanistar, said: “If the right regulation is put in place, the UK definitely has the ability to realise its potential as a global ‘crypto hub’. In the first months of her new role, the City Minister will need to assure the public that crypto can be a safe and secure alternative to fiat currency, so long as it is properly regulated. The Financial Conduct Authority (FCA) has already been proactive in this area, warning retail consumers that crypto assets are high risk and still largely unregulated. Regulation is therefore key and is where the UK’s potential to be a ‘crypto hub’ will be unlocked.
“Striking the balance between secure regulation and shackling an industry is integral to the potential of the UK’s crypto hub dream. The UK government will be mindful of overstepping the mark when it comes to deterring overseas investment and innovation with too much red tape. On the flip side, security and earning the trust of sceptics will also be a consideration for regulation framework.
“Consulting experts from both the crypto and FinTech space will dramatically improve the government’s understanding of proposed regulation and how it must look. Failing to include this much-needed lobby will provide much needed clarity and guidance on this time sensitive, complex task.
“Once regulations are in place to make crypto a safer and more secure investment option for UK consumers, there will be a wave of new products and solutions available to the market. In a similar way to how the influence of FinTechs and neobanks have revolutionised payments in the UK, access to crypto will be seamlessly integrated into apps and platforms. Lanistar has already integrated crypto exchange functionality for its customers, allowing them to purchase Bitcoin and Ethereum using their accounts. FinTechs who act early to build integrations like these will be best placed to reap the rewards of the impending regulatory changes.”
Baber concluded: “Although Brexit has had a negative impact on financial services and our relationship with the EU, there is now an opportunity to regain closer ties with our biggest and closest trading partners to recapture our position as a leader in FinTech and finance. The EU is pressing ahead with trading agreements focused on digital technologies, for example with Singapore. If we do not regain our relationship soon, we will fall further behind resulting in lost revenue for our government.”