Tl;Dr: A report published by London based think-tank Policy Exchange finds that the UK has a tremendous opportunity to capitalise on the ongoing migration of Web3 firms from the US. Last year, £943 billion of crypto-assets were exchanged in the US. A reasonable estimate suggests that the UK, through the right regulation, could capture about £29 billion of this activity, and 36,000 jobs.
At Coinbase, we’re working hard to help update the financial system by building trusted products that expand the utility and adoption of crypto because we believe crypto and blockchain technology have the ability to increase economic freedom and opportunity around the world. Coinbase chose to become a public company in the US because we believe the US would best be served by embracing this fundamental innovation, but we’re also focused on international markets, many of which are moving forward with strategies to become “crypto hubs.” We would like to see the US take a similar approach, but a regulation by enforcement approach in the US is instead leading to a disappointing trend for crypto development in the US.
Last year in the UK, the Chancellor of the Exchequer, now Prime Minister Rishi Sunak, made clear his goals for Web3, aiming to make the UK a global crypto hub. The government noted the importance of crypto and digital assets for the future of finance and the jobs the sector creates, and moved to do what some jurisdictions have conspicuously not done: consult with industry leaders to ensure effective regulations are developed. Just this week, at the Conservative Party Conference in Manchester, the Government doubled down on this, with Chancellor Jeremy Hunt stating: “We’re going to make Britain a global leader in the industries of the future – the world’s next Silicon Valley.”
A welcome new report, published by the leading UK think-tank Policy Exchange, describes how blockchain technology will be the underpinning of the next wave of internet development (“Web3”), and crucially how the technology can be harnessed across a broad swathe of economic sectors, not just financial services. It shares recommendations for what the UK Government needs to do to capitalise on the innovative potential of this powerful new technology. This is especially important in the context of increasing regulatory uncertainty across the pond. Several major firms, including ourselves, a16z, and Fidelity have set up operations in the UK. Other companies, for which Web3 is not a pivotal part of their business, like Revolut and Gamestop, are shutting down their blockchain applications in the US to avoid the potential ire of regulators.
Just last week, I spoke at Leeds Festival of Ideas alongside Sir Jon Cunliffe, Deputy Governor of the Bank of England. I was really encouraged to hear him speak about the Digital Pound initiative. The Bank of England has been a global leader on the future of money, and they recognise the potential for blockchain technology to improve payments by increasing efficiency, lowering costs, and introducing enhanced programmability. Furthermore, the Bank of England will shortly develop standards for stablecoins, and we welcome their approach to allow private sector stablecoins and a possible Digital Pound CBDC to coexist in a mixed payments ecosystem. We have seen other leaders in traditional finance around the world – from the Bank of Spain to the Monetary Authority of Singapore to the Central bank of Brazil, increasingly leaning into crypto out of a recognition that with more than 400m global users of digital assets, this is a financial asset class that supports economic freedom and empowerment.
Our recent assessment found that 83% of major global financial hubs are providing increasing regulatory clarity on crypto. The UK is part of this figure, and indeed, due to its foresight, has already enjoyed significant success in attracting Web3 startups. Let’s keep this momentum going and make the most of this enormous opportunity.
International
About Tom Duff Gordon
Tom Duff Gordon is Vice President of International Policy at Coinbase, where he drives the company’s engagement with policymakers in global markets across the UK, Europe, APAC, LatAm, and the MENA region. Tom previously served as Managing Director at Credit Suisse, Head of Public Policy Europe and UK, where he had responsibility across all areas of regulatory policy and government affairs and chaired the internal global Credit Suisse policy committee, which coordinates positioning on international and cross-border issues. Tom is on the Board of the International Regulatory Strategy Group (IRSG), the leading, cross-sectoral UK regulatory policy trade association, where he chaired one of the standing committees. For three years he co-chaired the main policy committee for the Association of Financial Markets in Europe (AFME). Tom holds an MA degree from the University of Oxford. He began his career as a consultant at Accenture.