What impact will Brexit have on blockchain in the UK?

Rage Commentary : Last week, the UK decided to leave the EU, which quickly attracted widespread attention. Previously, the UK was favored by European companies for its friendly regulatory policies on blockchain technology innovation, and many companies merged into the UK to enjoy its policies. However, as the news of Brexit came out, the UK's attractiveness to foreign companies began to decline, and its status as the capital of blockchain innovation may also be threatened. Luxembourg, Berlin, Stockholm and Zurich are ready to take over this position. In order to reduce the impact of Brexit, members of the blockchain community believe that the Commonwealth should conduct friendly consultations with its European neighbors.

Translation: Nicole

Friendly regulatory policies have quickly made London the capital of blockchain technology innovation. Last week, the UK’s decision to leave the European Union raised questions about whether the market position of blockchain will be affected.

From creating a safe zone for blockchain companies to passing measures to exempt bitcoin from VAT, the UK is preparing for measures being considered by the European Union, while also putting pressure on US regulators to reconsider their policies on internet financial innovation.

The European Union referendum (“Brexit”) has brought a hint of uncertainty to the forward-thinking, liberal environment that technology advocates have long praised as conducive to the development of blockchain technology.

According to Jacek Czarnecki, a lawyer and digital currency expert at Wardynski & Partners, many European companies merged in the UK before last week’s vote to avoid “red tape in their own countries,” but that appeal appears to have declined after the UK was pulled out of the EU.

Jacek Czarnecki

Czarnecki told CoinDesk:

“At least in the short term, London will lose its position as a candidate for the European digital currency capital. They still have a lot to offer, but it is significantly less than before, and it adds more uncertainty to the future.”

If the U.K. vote puts its position as Europe’s national digital currency leader at risk, other cities are ready to take over.

Czarnecki said Luxembourg, Berlin and Stockholm were all positioned as voices for the European Digital Currency Chamber, however blockchain consultancy Agentic Group added Zurich to the list as a city that has proven its attractiveness to companies in the new industry.

It's time to renegotiate

To mitigate the impact of Brexit, at least one member of the region’s blockchain community believes the Commonwealth should negotiate amicably with its European neighbors.

Adam Vaziri

Adam Vaziri, a board member at the UK Digital Currency Association, a nonprofit education and advocacy group, told CoinDesk:

“Depending on what is negotiated, the impact of the UK’s blockchain regulation could be reduced.”

In February, the Financial Conduct Authority (FCA) created a “safe zone” for UK firms to experiment with financial technology, including blockchain, but such a policy could also be overturned by the vote.

According to Vaziri, the impact of such a change could be both positive and negative. He said that currently, the FCA can only remove UK companies from its own rules, but EU regulations will still apply.

Vaziri said:

“Depending on what the UK and EU are negotiating, you’ll find that the FCA will be more rigorous in engaging with blockchain companies.”

A possible future path is for the UK to join us as an independent member of the European Economic Area.

According to Vaziri, current members of the EU are also members of the EEA, but non-EU members such as Iceland, Liechtenstein and Norway are also members of the EEA, making this a viable option for the UK.

With such qualification, British companies will follow some European financial regulatory rules and enjoy passporting benefits, but this will not have much impact on EU policy making.

All agreements will be respected

In addition to becoming a hotbed for European startups looking to partner with local banks, the Bank of England itself is gradually exploring potential applications for blockchain technology.

Now, those agreements and negotiations between UK firms and EU members will be pursued, but that could also change, according to a statement from the Financial Conduct Authority (FCA) on Friday.

The FCA released a statement:

“The long-term impact of Brexit on the UK’s overall regulatory architecture will depend on the UK’s future relationship with the EU.”

Importantly, Vaziri said there will be “no impact on any existing passporting entities” doing business in the UK that wish to use the law to require EU members to respect their own laws.

The FCA has issued an electronic money certificate to Circle, an internet finance company. The impact of its regulatory policy has sparked widespread discussion in the UK and other parts of Europe.