The controversy surrounding the much talked about Brexit is getting messier with every passing day. As a matter of fact, it is becoming difficult to gauge its ramifications on the economy that has prided itself as one of the most effective financial hubs in the world. One thing is for sure, Brexit will definitely have an effect on the global economy.
Although crypto is built on a decentralized system, still the imminent break away of Britain from European Union would, in one way or the other, have a lasting impact on the general outlook of the crypto space in 2019. Bearing this in mind, we will take a look at the possible effect of this colossal exodus and if it spells doom for crypto in this region, or whether it would open new doors for developments.
What Is The Situation Report?
The uncertainty surrounding the orderly decoupling of the UK from the European Union, as both parties are yet to reach trading agreements, could lead to what some experts call a hard Brexit. This implies that the inability of both parties to reach a consensus before the deadline for Brexit would have a devastating effect on UK’s banking dynasty with some expert forecasting an imminent recession that could last for at least two years.
On the other hand, the EU could also be on the receiving end of a hard Brexit with the UK commanding enough economic leverage that would definitely leave a hole in the region’s economy. This argument is reiterated by Christian Sewing, Deutsche Bank chief executive, who warned that the crisis could half EU’s economic output.
Amid this chaos is a strategic move by the likes of Binance to set up a business presence in this region, which will put them at the forefront of the flow of money into the crypto space that crypto experts describe as inevitable. Binance is working on opening its office in Jersey, a self-governed region in the UK, and reports suggest that registration has not gone as smoothly as they would have expected.
In a tweet earlier this year, Binance’s chief executive Changpeng Zhao stated that:
“Binance.je is overwhelmed with registrations… There is a backlog of KYC (Know Your Customer) verifications already. More resources are allocated to reduce it. In the meantime, we appreciate your understanding and patience. Just crazy! One thing we do ‘well’ is underestimating ourselves, and the market.”
Considering that Binance is willing to go through this level of stress to open its business in this region, then it is safe to say that the firm believes that the reward is well worth it. according to Wei Zhou, Binance chief financial officer, “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.”
This brings us to the impact of the situation brewing up in Europe on the crypto space both globally and in the UK.
What Are The Effects Of Brexit On Crypto?
Bitcoin and cryptocurrency, in general, has this uncanny characteristic of thriving in regions with one or more financial crisis and this has led expert to project that a hard Brexit will bring crypto into the spotlight in Europe. As earlier mentioned, the value of the Pound and Euro will likely fall and citizens looking to avoid this crisis will have no other choice but to adopt crypto for their various financial needs.
Furthermore, with UK’s striving to retain its position as a banking powerhouse, it has resulted to making deals with countries like Israel, Russia, South Africa, South Korea, Australia, Brazil, Canada, and China, which all have an affinity for blockchain technology. While China has officially banned crypto within its borders, South Korea, on the other hand, is a budding crypto territory. And judging from the fact that crypto firms are willing to take advantage of the situation in the UK, we can conclude that the future of crypto in this country is bright.
However, as always, regulations would play a major role in the establishment or the fallout of the crypto space in the UK.
What About Regulations?
UK’s status as a leading fintech hub is a result of its ability to retain and develop some of the most talented financial experts and this has rubbed off on crypto developments within its border. Apparently, the crypto fintech in the UK is one of the most impressive in the world. On the other hand, the EU has maintained a confusing stance on crypto that has left its member state to set up a separate legislative framework for crypto.
Although the same is true for crypto regulations in the UK, however, the country’s inevitable breakaway from the EU could spur the emergence of clear-cut regulations that would promote crypto. In the meantime, officials in the UK have maintained that they intend to uphold EU-introduced regulations like the fifth AML directive while abandoning regulations that borders on taxation.
Needless to say, Brexit-influenced growth in UK’s crypto space will go a long way to revamp the crypto market and promote adoption.