Brexit looming as a global game changer for Bitcoin and Fintech industry
October is not that far away, and if Boris Johnson, the new UK Prime Minister and died-in-the-wool Brexiteer, has his way, the global economy, including Fintech and all things crypto, could be in for a major shake up. President Trump seems to be manning the “FUD” pump at the moment, spewing chaos into international trade arrangements, but once this turbulence dies down, then Brexit will assume center stage. All speculation will disappear, as the reality of the situation may be chaos re-visited, déjà vu all over again.
If there is anything or group of things that financial markets detest, it is fear, uncertainty, and doubt. The global economy is already conflicted, reeling for a decade from central banking experimentation with global monetary policies that have wound natural market forces into a submissive, but coiled state. One can almost feel the tension in the spring, as if the slightest nudge might cause an enormous reaction to jolt global markets back to some semblance of true normalcy. As the days march by, the UK is girding its loins in preparation for what populism and protectionism hath wrought.
How will Brexit impact Bitcoin price behavior? There is general consensus that capital will rush to BTC as a digital “safe haven”. Per Nicholas Gregory, CEO of blockchain firm CommerceBlock: “Bitcoin has rediscovered its mojo this year with multiple mini surges, but a no-deal Brexit could see a massive and unprecedented breakout. Not only will a no-deal departure from the EU create turmoil and volatility across two major fiat currencies, it will also trigger an identity crisis for the global system, as the contingency and vulnerability of major global fiat currencies is laid bare.”
As for the UK Fintech industry, the storyline there is a bit more complicated. Here are a few varied opinions on the topic:
Jane Thomason, CEO of Fintech Worldwide
“Just as the U.K. is the financial capital of the world, London is the fintech capital of Europe, only lagging behind China and the U.S. in terms of global placement. The strength of the U.K.’s position is built on three key factors: U.K. financial services, the nature of U.K. customers and the U.K. regulatory environment. Investors put more money into U.K. fintech than any other European country in 2018. Fintech thrives in London, for the financial sector is uniquely located alongside a booming technology sector.”
Nick Botton, consultant at Landmark Public Affairs
“If we take No-Deal Brexit as the most likely outcome, we can expect a significant downturn for the U.K. fintech market. The best thing that could happen for the U.K. fintech industry (other than the cancellation of Brexit), would be for Brexit to take place under the Withdrawal Agreement. In short, this would increase the likelihood for the status quo for the U.K. financial industry to be conserved, even if the inevitable harm to the U.K. economy caused by Brexit does cause some disruptions.”
Antoine Baschiera, co-founder and CEO of Early Metrics
“Having rated over 2,600 early stage startups, we know the quality of the team has the biggest impact on growth potential. So if Brexit were to diminish the talent pool, it could definitely stunt the development of budding fintechs and therefore reduce their attractiveness to investors. Also, if Brexit were to push corporations to relocate (as JPMorgan and others have already done) we expect several fintechs will follow.”
The Fintech opinions are mixed, but one thing is certain. As soon as a no-deal Brexit is implemented, the long anticipated consequences will make themselves readily apparent. Yes, there may be actions taken by early movers, as is always the case. The status quo, however, will change dramatically. There will be winners and losers, but hopefully, assimilation will occur over a short period of time and without too much disruption.
Perhaps, the best concluding statement comes from Antoine Baschiera: “Nevertheless, the U.K. remains the most welcoming country for fintechs in terms of regulatory framework, so regardless of how Brexit unfolds, it will maintain a certain competitive edge over its EU neighbors. But for how long?”