UK is a stronghold for DeFi, with access to talent and funding, but needs entreprise adoption and inclusive regulation.
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The UK is a financial powerhouse, giving it an edge in blockchain technologies. Blockchain’s heavy financial focus makes London a logical homebase for many top blockchain companies. And, in 2018, London came in second in the world for the amount of early stage blockchain company funding. However, Brexit has led to some uncertainty in the market. Overall, we still found the UK to be a major player in Europe’s blockchain ecosystem, and gave them a 64.0 out of 100.0 in our European Blockchain Review 2020.
The UK’s strong financial system set it up to be a leader in crypto and DeFi. There was a lack of oversight, making the system uncertain for potential investors. According to Jamie Burke of Outlier Ventures says:
‘Europe [has] perhaps the most permissive regulatory environment for tokens as a form of crowdfunding globally’.
But the ‘permissive’ environment also meant that there was a lack of guidance for both those issuing tokens and those investing in them.
The regulatory body — the AMF — is expected to step up, though. Increased regulation is generally viewed as a positive, as it provides protections for those entering the space. There is some concern over the stringency of new regulations and privacy under them, but as the UK sets out to distance itself from former EU regulations, increased oversight could act as a new beginning of sorts, breathing life back into a blockchain ecosystem that took hits under an uncertain future and lax regulations.
As DeFi picks up and gains more corporate interest, the UK has the resources and established financial services to establish strong projects. Along with increased regulatory services, this could shape the future of the blockchain ecosystem in London and the broader UK. Mel Gelderman of Monolith says:
‘Good universities and an interest in finance means that there is plenty of talent and funding to go around’.
So even while the EU might draw some projects away from the UK, as the market settles, the UK will likely see renewed growth in their ecosystem and the emergence of some of the top blockchain companies.
Between regulatory changes and the exit from the EU, many feel like the UK ecosystem in particular is ‘holding its breath/in suspended animation’, as Piers Ridyard, Radix DLT CEO put it. However, the uncertainty of where the UK will fall in blockchain innovation in the future is tempered some by a strong environment already. The question remains on how innovative and open to blockchain the current financial community is, and how open to collaboration the AMF remains.