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Brexit Deal or No Deal: The Effect on UK’s Blockchain Industry

Brexit Deal or No Deal: The Effect on the UK Blockchain Industry

The United Kingdom’s impending exit from the European Union has the economy on edge. Parliament has yet to approve Prime Minister Theresa May’s exit agreement and a so-called “no deal Brexit” is a looking like a real possibility.

Just a few months away on 29 March, the UK is scheduled to leave, and nobody knows quite how the laws and regulations that the EU currently govern will be affected, what the situation will be for EU workers, or what trade relations will be in place for the rest of Europe.

With these instabilities in mind, here are some of the effects Brexit may impose on the UK’s leading blockchain industry.

Financial regulation

It is no secret that the City of London is Europe’s financial capital but many have questioned whether it can remain in this position when the UK leaves the Union. Many financial service providers are there, after all, to provide services to European clients from a location that adheres to all of the required regulation.

If the UK no longer follows EU finance regulations, it will likely fail to attract these international firms. Coinbase, for example, has already moved its European base from London to Ireland. Part of the blockchain industry’s success in the UK can be attributed to the existing infrastructure for firms and international talent that the City of London attracts. In this case, what is bad for mainstream finance also looks to be bad for blockchain.

However, Brexit also offers the UK a chance to create its own unique financial policies which have the potential to produce a more crypto-friendly environment than that imposed by the EU. While the Union requires firms to uphold strict know-your-customer (KYC) and anti-money laundering (AML) policies for their clients, Brexit would be the chance for the UK to create a more autonomous financial sector, although there has yet to be any indication of a move in this direction.

Another case that could work in the blockchain industry’s benefit is if the UK chose to adjust its DPA 2018 legislation (its version of Europe’s 2018 General Data Protection Regulations) which has caused much friction for operations built on immutable blockchains that do not readily allow the removal of data as the privacy regulations require. Any data regarding European citizens that is stored on a blockchain would still be subject to GDPR, although Brexit would give the UK an opportunity to create more flexible regulations compared to GDPR.

EU workers

The blockchain industry faces the same challenge as every other sector in the UK regarding migrant workers from the EU. While the government has just launched a scheme that would allow current EU residents to remain living and working in the UK after Brexit, the plan has faced scrutiny over its impracticality in registering residents. This owes to the facts that the application only works on the most recent versions of Android phones, and a fear that they are not doing enough to let people know they must register themselves.

Europeans who fail to register on the Settlement Scheme could find themselves deported from July 2021.

London, the UK blockchain hub, is compiled of 14% European workforce, with 26% of workers coming from outside of the EU.

Trade deals

As it stands, Theresa May has ruled out the chance of the UK remaining in the Single Market and the European customs union after Brexit.

This will impact both businesses that use blockchain to export or import products between the UK and Europe, as well as those that provide services of any kind within the region. Services account for 70% of economic activity in the EU and the Single Market gives companies the freedom to offer these services anywhere within the Union.

The last few years have seen cryptocurrency exchanges such as Binance expand across Europe, but leaving the Single Market means they would have to operate with the UK’s own unique regulations. To keep up interest from exchanges, the UK will have to prove its worth the extra costs required to move operations locally.

Losing its voice

The UK has one of the leading blockchain industries in Europe, but Brexit could result in a loss of political power in drafting crucial legislation for the technology. For one, with no more Members of European Parliment representing the UK after Brexit, the country will no longer be allowed any official input in creating EU policy.

Pro-crypto MEPs such as Eva Kaili have proven how effective a positive voice can be in the governing body, with her efforts resulting in the crafting of the parliamentary Blockchain Resolution.

Blockchain and Brexit

It is not all doom and gloom for the industry, however. Blockchain has indeed been given a spotlight by the UK government for its potential in providing a solution to the customs crisis, being hailed as an opportunity to continue providing ”frictionless trade” with the EU.

Particularly valuable on the contentious issue of the Ireland border, blockchain has been hailed as a way for the government to track the movement of goods in a transparent, immutable, and non-invasive way. The UK’s finance minister Philip Hammond even called blockchain an ”obvious” solution to the problem.

An uptick in blockchain logistics solutions could well increase the levels of UK companies that adopt the technology, but financial services providers that utilize blockchain may find themselves having a more difficult time adjusting to the forthcoming new regulations.

May’s latest update in Parliment on Monday 21 January included a commitment to sticking to the 29 March Brexit date so there is not long left to see what the deal will look like, if there is one at all.

 

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Jersey Exchange Swamped with Bitcoin Demand as UK Squabbles Over Brexit

jersey, cryptocurrency, binance

Hong-Kong based Binance is experiencing a huge response for Bitcoin at its newly opened trading platform on the Island of Jersey.

CEO Changpeng Zhao has reported crazy demand for new registrations on the new exchange since its opening last week which is based in the self-governing UK dependency. The overwhelming amount of applications for KYC is thought to be a direct result of the current uncertainty on the UK mainland over Brexit.

With UK prime minister Teresa May’s crushing defeat of her deal with the EU for an orderly exit from the European Union, the country is now faced with numerous options, none of which can be agreed upon by politicians charged with the responsibility of delivering Brexit. Binance’s Chief Financial Officer Wei Zhou explained why the mad rush for Bitcoin in Jersey:

“Expanding the cryptocurrency exchange markets with fiat currencies in the European region is opening new economic opportunities for Europeans as well as freedom from looming Brexit uncertainty where the pound and euro are also in concern.”

Zhou goes on to explain that in his view, broader cryptocurrency adoption can be achieved by bridging the “crypto-fiat channel for Europe and the UK.” Binance has maintained for a while that Brexit could well impact on Jersey in terms of it becoming a driving force within Europe’s crypto market which has lagged behind Asia and North America.

Data provider CryptoCompare recently identified Europe’s sluggish performance compared to other markets, returning less than 4% of the global volume last year. Last week, UK Finance warned of the catastrophe that would occur within the country’s financial system if a no-deal Brexit was the final outcome on 29 March.

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Ireland Needs Blockchain Workers but Few are Listening

Despite some Irish universities’ push to promote blockchain technology through education, it appears the industry and general public aren’t getting the message if the results of a recent survey have any credibility. Tech PR firm Wachsman has released the results of a survey which indicates that, although the industry is crying out for manpower, three-quarters of Irish people wouldn’t consider a career in a blockchain-related industry.

Ireland currently has a forward-thinking approach to blockchain technology. Earlier this year, National University of Ireland (NUI) authors of a study on the adoption of blockchain approached the government to promote a more widespread use of the technology in the country.

One of the findings of that study showed that only 40% of companies in Ireland had embraced blockchain technology, which the researchers felt was relatively low, despite Ireland’s 13th position on Bloomberg’s 2018 Innovation Index, with high productivity scores and advanced IT infrastructure.

With the latest Waschman commissioned survey it appears that the situation isn’t changing. “People in Ireland don’t know yet how transformative a technology blockchain is and that it’s such a wide-ranging technology,” claims CEO David Wachsman, suggesting that many feel that the potential for risk is too great.

The problem of “education” has arisen previously in other survey’s illustrating that there is still a lack of industry and public knowledge about DLT and how it functions. This recent survey indicated this lack of understanding was still a prevalent factor in blockchain adoption, with over half of the 1,000 respondents citing the education gap as a barrier. 10% simply thought that they didn’t have the necessary educational backgrounds to work in the industry. Wachsman argued:

“I think there is a risk that Ireland could fall behind, even though it has so many advantages, if people aren’t even willing to consider a career in one of the fastest growing industries. The education gap is real. It’s a severe challenge considering Ireland is a tech hub and should be embracing novel technologies.”

Research leader at NUI Galway, Dr Trevor Clohessy, sees the need for a national initiative to promote the new technology, particularly in the light of, as yet undecided border rules, between Ireland and the north following Brexit:

“…Beyond business, other beneficial uses of this technology would be in voting machines and ballot boxes to address electoral fraud and potentially looking at a blockchain enabled technology-controlled border identification system that could provide a possible solution to the current North/South Brexit border challenges.”

 

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Crypto Helping Homeless Through Winter on Scotland’s Streets

Scotland may not have gained its independence and its ministers continue to fight Brexit in the UK parliament amid cabinet resignations but with winter coming, at least Scotland’s homeless are getting a helping hand courtesy of cryptocurrency.

These are not good times politically for Scotland but spare a thought for those facing a bitter northern winter living on the streets of Glasgow. Cryptocurrency startup, the Scotcoin Project, clearly have, linking up with non-profit venture Social Bite to fight homelessness.

The project’s aim is to fund charity ventures and fight poverty in Scotland by generating enough funds to place the country’s homeless in rented accommodation and get them off the streets and on their feet in the cold weather. By donating GBP 5 to the homeless fund for every GBP 20 earned from its Scotcoin token sales, the project is coming just before winter starts to bite.

The winter program will be temporary as the project will looking for permanent accommodation through Scotlands’s “Housing First” program in the long term. Glasgow Housing First provides:

“… mainstream social housing and 24-hour support to individuals who are homeless, aged 18 or over and involved in drug misuse. The service places homeless individuals directly into independent tenancies in Glasgow with no requirement to progress through transitional housing programs. By sustaining a permanent tenancy in Glasgow, service users are in a better position to access community support, health care, and social benefits.”

Scotcoin almost became a victim of the country’s independence referendum on 18 September 2014, which resulted in a no-vote; a decision which is still having repercussions today, given that the country voted against Brexit by a majority in 2016 but are still bound to Westminster’s legislation.

Before the independence vote went the wrong the way for Scottish Nationalists, Scotcoin was being held up by its creators as a pro-independence cryptocurrency of Scotland, allowing the country to replace the pound if the country had voted “yes”.

Scotcoin’s leading stakeholder Temple Melville calls the project “an inspiring initiative” and indicated that the match between his company and Social Bite was a natural one as they were already operating in the same field: “One of our stated objectives is to help eradicate homelessness, and Social Bite is already well established within this area.”

Temple claims that he has rec