On March 29, 2019, Great Britain is set to exit from the European Union. The decision to leave the EU occurred via a referendum in 2016, despite no clear framework for what the nations ongoing relationship with the European Union would look like after exiting.
Bungled and incompetent negotiating by the British government, combined with an increasingly hardline EU line on continued British access to the single market means markets are beginning to price in the fact that in less than six months, trade between the E.U and Britain will become much more expensive and difficult.
The uncertainty around both Brexit and the future regulatory status of crypto-currency is increasingly shaping the investment decision of firms in the crypto-space. As European nations vie to attract cryptocurrency related investment, continued access to the EU single market has become the most important qualification for investment.
The British government has recently begun discussing the need for Blockchain regulation, and whether the industry should be overseen by the Financial Conduct Authority (FCA).
TRADITIONAL HAVENS SUFFER
Traditional offshore jurisdictions such as Gibraltar and Switzerland both suffer from this lack of clarity. Gibraltar has been a British possession since the early 18th century and has traditionally functioned as an offshore jurisdiction under British law. Other prominent British offshore jurisdictions include the Isle of Man, Guernsey, and Jersey.
THE RACE FOR BUSINESS
In a Pre-Brexit world, these island jurisdictions would have been natural candidates for crypto investment. With the prospect of hard Brexit rapidly approaching, and a loss of access to the single market, investment is now flowing to jurisdictions with clearer regulatory guidelines. Malta has emerged as the clear front-runner in this space, drawing significant investment as exchanges and other operators move to take advantage of Malta’s clear regulatory guidelines and assured single market access.
Even France, which has long been seen as having an unfavourable investment climate for the financial services and emerging technology industries, has been striving to attract its fair share of the emerging crypto industry. The Pro Business government of Emmanuel Macron has been aggressively courting financial services firms to move to Paris to secure their access to the single market. The French government has been working hard to clarify its crypto rules and drive investment in the space.