The crypto world has already been recognised by big players and regulators in the UK and consequently grown significantly, but according to new findings from the Startup Coalition, formerly the Coalition for a Digital Economy (Coadec), an independent advocacy group that serves as the policy voice for Britain’s technology-led startups and scaleups, this is only the beginning.
The research from the Startup Coalition, published in its new report, The Economic Potential of Decentralisation, reveals that by 2035, the UK could see £40billion of economic value from the crypto and web3 world. The report lists that the growing use of stablecoins, DLT-based User Generated Content (such as social media), and the cross-section of blockchain and AI will be the key drivers of this growth.
The Financial Conduct Authority (FCA) has already started working on crypto and web3 regulation, however, firm policy papers are not expected until 2026 at the earliest. The lack of a strong, concrete, decentralised government regime is disincentivising startups that want to get involved in the UK’s sector.
Firms are much more likely to look to establish themselves in the US, where there is a stronger regulatory regime for cryptoassets. In order for the UK to keep up, the Startup Coalition has made a list of changes that need to take place.
Marcus Foster, head of policy campaigns at Startup Coalition, said: “The Government is rightly using any levers it can to generate economic growth, in line with their core mission. Our report proves that crypto and Web3 can make a huge contribution to our economy – but only if action is taken now to allow startups to decentralise.”
Time for change
Startup Coalition is calling for the UK to:
Develop frameworks for the new internet era
Establish an objective and clear framework for measuring decentralisation, ensuring that protocols meet rigorous standards before being classified as such.
Explicitly exclude airdrops from licensing and disclosure requirements
In line with HMT’s proposed regulatory regime for cryptoassets, formally exempt airdrops from financial services licensing and disclosure requirements to avoid stifling innovation in early-stage crypto startups.
Tailor requirements for cryptoasset disclosures
Calibrate disclosure requirements to the risks of cryptoassets, discerning between centralised and decentralised protocols, and protocols involving ongoing efforts versus those that do not.
Prevent market abuse
In furtherance of the goals of the FCA’s proposed Market Abuse regime, introduce a mandatory post-listing lock-up period for insiders to prevent market manipulation in systems that are not yet fully decentralised.
Foster concluded: “We’ve laid out the blueprint, now it’s up to the Government to take it forward to unlock the potential £40billion we know is there.”
