Is London a vital cryptocurrency hub?

August 21, 2023
Kathryn Dodds

Senior Associate

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FinTech Partner James Burnie and FinTech Senior Associate Kathryn Dodds, both based in London discuss the key attributes that make London a vital cryptocurrency hub.

Connectivity to global markets for access to investors and customers

London is a global financial hub that is renowned for its well-established financial infrastructure, and is often used as a gateway between different jurisdictions.  The announcement of the expansion of A16Z into the UK is welcome in this respect, as demonstrating the attractiveness of the UK from an investor perspective.

The UK offers connectivity to international markets, helping crypto companies to access a diverse range of global investors, partners and customers.  It has a deep pool of institutional investors, venture capitalists, and angel investors who are actively involved in the crypto space. The presence of these investors provides access to capital, enabling crypto startups to secure funding for their projects and fuelling the growth of the ecosystem.

Skilled workforce

London has a highly skilled workforce and is home to world-class universities and research institutions. The opportunities in the city means it attracts top tech talent, including blockchain developers, founders and lawyers, who contribute to the advancement of the crypto industry through their knowledge and skills.

Event calendar

London has embraced the crypto culture, with a growing community of enthusiasts, meetups, and conferences focused on blockchain technology and cryptocurrencies. In recent months we have attended and spoke at conferences including NFT London and Crypto AM.  A core principle of the crypto community is collaboration and it is a principle that is shared by the London crypto community.

A new development we are seeing is also greater willingness by the UK regulators to engage with industry directly, with a view to better understanding how it works and to ensure that it is well informed to understand the requirements for best practice. We are seeing the FCA attend various industry events, as part of increasing engagement with the ecosystem.

Overall ease of doing business

The UK is consistently ranked as one of the easiest countries to do business in.  Companies can be incorporated quickly and cheaply and there is a robust legal and regulatory system that is universally regarded.

Traditionally, the UK system has been built around facilitating the creation of and development of start-ups into larger businesses. An interesting development here is the FCA’s new scale-up box, which is an evolution of the sandbox focussed on helping business develop and grow. This links also back to the FCA’s competition objective, which has been a relatively new development in which the FCA has an active obligation to promote competition, and therefore new business, in the United Kingdom.

Adoption of crypto

Research suggests that roughly 10% of UK adults have dealt in crypto. This is a relatively high level of adoption compared to many jurisdictions, however there is scope for greater adoption which is exciting moving forwards. A common barrier to adoption is lack of knowledge, and this is something we are seeing the ecosystem focus on addressing.

What are London’s strengths from a regulatory point of view and how could it improve?

London has the advantage of a well-established and robust legal and regulatory pedigree and reputation. As the UK has left the EU, there is now a greater ability for the legal and regulatory system to be adapted to new technologies, meaning that there is greater flexibility to support innovation moving forwards – in contrast to the previous regulatory framework, where as a member state of the EU the UK had limited ability to alter regulation to best suit nascent industry and innovative developments.

With the UK also taking a leading role in relation to AI regulation, and the first global AI regulation summit being in the UK, it will be interesting to see how things develop, and whether the UK can build on its reputation as being at the forefront of regulatory development and innovation.

To contact James, or read more about his practice, click here

To contact Kathryn, or read more about her practice, click here