Britain’s digital currency ecosystem is in peril. The impending collapse of Britain’s fintech ecosystem has already been covered on multiple occasions. A recent report published by the House of Lords committee reinforces the industry’s perilous position post-Brexit vote.
The report addresses the threat to over 7 percent of UK’s GDP as the UK fintech sector, headquartered in London currently employs over 1.1 million people from across the world. The report titled Brexit: financial services was published on December 15, 2016, by the Authority of the House of Lords, European Union Committee.
As Britain prepares to exit the European Union, there are many uncertainties regarding EU passporting, licensing regimes and market access. Most of the fintech companies had earlier chosen London as their preferred destination because of its position in the EU and the access it provided to the whole EU market. These very advantages may soon be a history once Britain officially exits the EU.
The committee’s observation states, “The danger is that, in the absence of clarity, firms will restructure or relocate on the basis of a ‘worst case’ scenario. We call for an early commitment from both sides in the negotiation that there will be a transition period.”
Many fintech companies are already busy drafting their post-Brexit plans, which includes shifting their base of operations or opening a subsidiary in one of the EU nations. Such a shift will lead to mass exodus of Fintech companies from the UK.
The committee behind the report states that it is essential to maintain the current passporting regime after Brexit. If not possible, then the government should make equivalent arrangements to allow access to other markets. If unsuccessful, then the cryptocurrency and fintech companies may try to emulate a similar model in other EU countries without much success. This will force Europe to concede its position in the fintech sector, which will ultimately benefit the second largest fintech hub — New York to move into the top position, replacing London.
The UK Department of International Trade has already implemented certain steps to foster and strengthen the fintech ecosystem. But in the end, the deals reached by the UK at the time of separation from the EU will play a deciding role in the country’s future as a fintech powerhouse.
Ref: TechCrunch | House of Lords Report | Image: NewsBTC