On behalf of all members of CryptoUK, the UK’s self-regulatory association for the cryptoasset sector, we welcome you to your new role. As the organisation representing crypto firms in the UK we look forward to working with you and your team over the coming months.
The cryptoassets industry is a fast-growing sector, worth more than £300 billion globally. However, the UK is missing out on a major opportunity – according to recent research conducted by Cambridge University, most wallet providers are based in North America and Europe – the US leads at 34% and the UK is second at 15% – followed by Switzerland, Germany and China.
The UK has an exciting opportunity to become a world leader in the crypto economy. However, we are falling behind other countries for three reasons, which we are calling on you to address:
First, access to banking services. In our recent survey of crypto businesses, we found that 73% of firms have opened a bank account in another country due to complications with banking in the UK. More than half of those who tried to open an account have been rejected, with half receiving no reason from the bank. This is despite Payment Services Regulations which require providers to give a reason for declining services to firms. Across the Channel, France has introduced legislation supporting regulated firms to access bank accounts. We support this approach and urge the UK to follow suit.
Secondly, we need a proportionate, well-designed regulatory regime for cryptoassets in the UK to support the sector’s growth. This process has begun, with a series of consultations this year – but it is vital that this concludes with the introduction of new, proportionate rules as soon as possible to give regulatory certainty to the sector. Whilst the UK Government has made positive noises, other countries such as Japan and Switzerland have grasped the initiative more strongly. As the Government seeks to compete on the global stage post-Brexit, we urge you to take the lead in attracting crypto companies to base themselves here in the UK.
Thirdly, we must show the world that the UK is open to crypto innovation as a central element of the Government’s Fintech Sector Strategy. Rather than simply being a regulatory challenge, the growth of cryptoassets is an opportunity for the UK. With a positive attitude and a proactive approach, we have the potential to be a world leader. Cambridge University has found that whilst the UK is home to several high-profile cryptocurrency exchanges, most people in the industry are employed in Asia-Pacific and North America.
These three actions would allow the UK to benefit not only from the expertise of crypto firms in this evolving technology, but also through the fiscal contributions of inward investment, tax revenues and employment. Realising these benefits will require government to take decisive action to improve access to banking services, introduce proportionate regulation, and make a clear statement of the importance of cryptoassets to the UK’s ambition to be the world’s leading fintech hub.
Congratulations again on your appointment – and we look forward to working with you.
Iqbal Gandham (Chair, CryptoUK)
CC Economic Secretary
Minister for Digital