Is the UK Positioning Itself to Become a Front-runner of the Crypto Revolution?

by Apr 19, 2023Articles

Articles

Imagine a land where innovative technologies are embraced, banks and fintechs work together, and the financial system is given a much needed overhaul.

This isn’t some utopian fantasy.

It’s the vision Brian Armstrong has for the UK’s crypto sector.

Armstrong is the CEO of Coinbase, an exchange with 110 million users and $145 billion in quarterly trade volume.

In his words, “things are happening in Europe that are edging the region ahead and, when it comes to embracing the digital economy, the region is preparing for a seismic change in how it uses and thinks about money.”

And he’s very excited about the UK in particular…

You can see his full post on this here.

Brian’s not alone…

Last year, Rishi Sunak, as Finance Minister, said he wants the UK to become a “global hub for crypto asset technology.”

This is a big deal.

Embracing and creating a framework for crypto regulation is something the US has been asleep at the wheel on.

In fact, US regulators and a group of firebrand politicians seem hellbent on comically ignoring the use cases for blockchain technology.

Democratic Senator Elizabeth Warren, like a child stubbing its toe and seeking retribution by punching a stranger in the face, has signaled she’s “building an anti-crypto army.”

See her toe stubbing here

Right now the US finds itself embarked on a very peculiar witch hunt where the rules seem to be as follows:

1. Refuse to set regulation, despite wide calls from everyone (including those in crypto), to do so

2. Sue and sanction companies for falling foul of regulation they haven’t yet set

It’s like an episode of Laurel and Hardy.

As Wired report:

“People in the industry say that a better resolution would be for the US Congress to put in place comprehensive legislation governing crypto.

The European Union is on track to introduce broad-based crypto legislation in 2024, under the Markets in Crypto Act (MiCA), and countries like Japan and the UAE have also moved quickly, but the US lags behind.”

Perhaps we shouldn’t be surprised.

It wasn’t long ago where confused congress members stared blankly and slack jawed at Mark Zuckerburg during the Facebook trials and asked questions like:

“How do you sustain a business model in which users don’t pay for your service?” (Sen. Orrin Hatch)

“Senator, we run ads,” was Zuckerbergs reply.

This could be a rare opportunity for the UK to steal a march

It has been an encouraging timeline to date:

In February, the government published a consultation paper on the regulation of stablecoins, proposing a framework for their use as a means of payment.

In April 2022, the UK Treasury announced the establishment of a regulatory sandbox, allowing crypto businesses to test new products and services in a live environment, while enjoying a reduced regulatory burden.

The government says it is working with international partners to develop global standards for crypto regulation.

If it comes off this could help the UK become a global crypto powerhouse.

Time will tell how regulations will unfold, but it’s a promising story.

Not everyone is so keen.

The Governor of the Bank of England, Andrew Bailey, claims Bitcoin, and other, cryptos “have no intrinsic value.”

That’s a very bold statement given that…

🔻 The pound has been de-pegged from gold for nearly 92 years

🔻 Inflation currently stands at over 10%

Especially given that Bitcoin is deflationary.

Perhaps he’s high on the fumes from all the money he’s printed.

The supply of bitcoin is fixed by its underlying protocol. This means it cannot, under any circumstances, be increased beyond a certain amount.

Specifically, the maximum supply of bitcoin that can ever exist is 21 million units, and this limit is hard wired into it.

No coder, autocrat, politician or banker can change it, or manipulate it…

You can’t simply *ahem* print more…

Thankfully it’s looking like Bailey is onto a losing wicket here.

At the moment the ball looks like it’s in the government’s court as they take steps to create a regulatory framework for crypto.

And it’s about time – support for crypto in the UK is backed by some impressive statistics.

✔️ Currently, 22% of UK adults owns crypto

✔️ Another 28% are likely to buy or trade crypto in the next 12 months

Much of that will be (very wisely, in our opinion) because people believe it is a good investment over the long term.

But an even more interesting statistic is this:

84% of UK adults believe that the global financial system unfairly favours powerful interests

And a 65% agree that the financial system needs major changes or a complete overhaul.

I think this resonates with most people.

We are locked in inertia.

People don’t trust the banks. They certainly don’t trust politicians.

We play within the confines of the current financial system simply because it’s there.

Make the alternative better: Cheaper, fairer, faster, more transparent, more secure and everything changes.

Then the traditional banking system – if they are still whining, banning exchanges and refusing to integrate tech – starts to look very shaky indeed.

As Brian Armstrong suggests the key now is to encourage collaboration and get banks and fintechs to join the crypto revolution.

To embrace Web3 and blockchain adoption in the economy as a whole.

To promote stablecoins and develop a regulatory framework that supports digital assets.

To update digital property rights and crypto collateral and bring the UK’s legal framework into the 21st century.

These are exciting times.

If we don’t mess this up the UK’s crypto future could be bright.

The Key Takeaway

The UK and Europe have an opportunity here.

Right now the US seems to be making a terrible mess of things with crypto regulation. The witch hunts, and the squawking, strengthen the use case for this technology and it’s fascinating to watch the story unfold.

Meanwhile the mood is softening in the Europe… reputable exchanges are invited to the table to help plot a route forward.

There are no restrictions, this side of the Atlantic, on staking crypto where you can grow your pot even further, without lifting a finger.

It’s a great time to get involved.

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