What are the Effects of Brexit on Crypto?

5 min readNov 2, 2018

In a referendum on 23rd June 2016, a small majority (51.9%) of voters determined the end of Britain’s long-held relationship as part of the European Union. Since then, the nation has participated in numerous difficult negotiations to try and determine the terms and conditions of its departure.

Meanwhile, the cryptocurrency market exploded, Bitcoin became the 2nd most searched global news term of 2017 and the price rose from below $1,000 to nearly $20,000 before settling back down. Digital currencies have gained a lot of attention from both investors and regulatory bodies but how will the Brexit impact the current crypto ecosystem?

Value

Immediately after the Brexit result announcements, the UK experienced a significant decline in the value of their national currency. The pound crashed to a 31 year low, dropping a massive 10% against the dollar; a decline that has failed to ever regain traction.

Despite this detrimental effect on the Sterling, the news appeared to have a positive impact on the cryptocurrency market. According to CoinDesk’s USD Bitcoin Price Index, in the days leading up to the Brexit vote, from 1st — 18th June, Bitcoin climbed an impressive 47%.

More than a year on and the fiat currency is yet to rejuvenate strength. With the Brexit deadline approaching in March, no-one is able to predict with certainty the direction of the Great British Pound. However, one trend that appears to have arisen is that a lack of faith in fiat leads to a rising faith in crypto.

Fin-tech

There is a huge number of FinTech companies (such as Plutus) investigating and applying the use of cryptocurrencies that will be affected by the transition. London is renowned for its strong positioning as a global FinTech centre, however, the Brexit result has brought this into questioning. According to Bruegel, the UK currently holds an overwhelming 80% market share of the European FinTech industry that’s valued at £4.5Bn. Immediately after Brexit announcements, German payment platform Traxpay tweeted “London has committed suicide as a leading FinTech centre”.

Its position is largely attributed to excellent talent sourcing and supportive policy stances. The UK FinTech sector employs more workers than Singapore, Hong Kong, and Australia combined. There is concern that any changes to immigration policies may limit the UK’s abilities to attract or retain highly talented European workers.

Despite any concerns, venture capital investments more than doubled last year in comparison to 2016, reaching $1.8Bn. This is a hugely positive statistic for Britain’s FinTech industry when compared to the 18% drop experienced globally.

London’s current standpoint combined with “an established legal infrastructure, rich talent pool, cultural cache and access to investment[s]” suggest the UK will remain a hub for FinTech’s. This would be a great relief for the vast number of UK companies grappling with newly emerging digital currencies.

Regulation

The UK Treasury Committee have issued their concerns describing supervision of the crypto sector “as a matter of urgency”. The UK did create a task force in March to observe the use of crypto assets and feedback ideas as to how laws could be implemented in the future, however, no regulatory measures have been put in place just yet.

Despite the lack of concrete changes, snippets occasionally pop up as to the various national stances on cryptocurrencies, and the European Union have very conflicting opinions. Estonia attempted to create its own state-back cryptocurrency “estcoin”, however Draghi rejected the concept in September stating “No member state can introduce its own currency”. Whilst others like Slovenia and Malta are embracing crypto assets with open arms; enticing many blockchain companies to settle there.

On the whole, the UK’s stance is slightly more open and positive for cryptocurrency exchanges than the varying EU positions. The UK Treasury Committee believe if crypto assets are regulated and dealt with properly, the industry could act as an opportunity for Britain. Nicky Morgan, chair of the committee, mentioned that if the government were to encourage crypto asset growth then the UK could become a global leader in crypto.

Trade

Despite differencing approaches to cryptocurrency regulations, the UK is one of 26 out of 28 EU member states to sign the European Blockchain Partnership (EBP). An agreement aimed at exchanging knowledge in both technical and regulatory fields for an EU-wide Digital Single Market utilizing the technology. Earlier this year however, Theresa May confirmed the UK will be leaving the EU Digital Single Market but seeking to maintain a strong data relationship with the trading bloc. It is difficult to identify how the UK will interact with the EU on such topics.

So… How Is Brexit Going to Affect Crypto?

There still remains a great deal of uncertainty surrounding nearly every aspect of Brexit and its impacts. A poorly managed Brexit could weaken the pound enticing consumers to secure their assets in the form of digital currencies.

On the other hand, the Brexit could enable the UK to form laws and regulations of their own that would allow crypto FinTech’s to thrive. Unfortunately, this depends almost entirely on the decisions made by our government and regulatory bodies. The powers determining its regulatory development are still treating cryptocurrencies as an untouched taboo.

Plutus, a London Based Crypto Start-up

Plutus is a combination of a decentralized exchange (PlutusDEX) and a payments platform that is enabling users to convert crypto and use the resulting balance for spending. Currently, just 0.1% of businesses accept payments in the form of crypto, a challenge the London based start-up is overcoming.

Payments can be made using either a Plutus Debit Card or via the Plutus app. It essentially enables users to quickly and conveniently convert their crypto into spendable fiat before paying at any NFC enabled terminal globally.

This is all facilitated by the companies very own PlutusDEX. A customer’s cryptocurrencies are transferred directly to a trader looking to purchase crypto at that moment, and the trader’s fiat is used to top up the customer's spendable balance.

Unlike centralized exchanges, Plutus does not hold user funds at any point. Period. Given the number of company wallet hacks going on, this makes for a far more secure alternative. Users are in possession of their funds at all times, regardless of any exchange downtime (e.g. maintenance).

Plutus currently have a live beta version of their mobile app. If you are looking to buy, sell or use your cryptocurrencies then take a look here: Plutus App

*Whilst in beta, Plutus will be covering all costs. Buying and selling cryptocurrencies will be fee-free*