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After Brexit Britain Will Receive Crypxit

30 August 2018 16:05, UTC
After Brexit Britain Will Receive Crypxit
By Oleg Koldayev

Not so long ago it became known that Great Britain had adopted a program to support the blockchain startups. The investment company Entrepreneur First (EF), which has taken on the brunt of the financial burden on investing in the newcomers’ teams, will become the driving force of the process. Not without the government support, of course. Moreover, the startup country of origin is not of fundamental importance.

Companies with "great growth potential" will be able to get a business visa without any problems as the Department of International Trade and Entrepreneurship of England said. The only condition is they need to invest 50 thousand pounds. Money however can be borrowed from EF, which is "especially interested in those startups that are aimed at solving complex technical problems". Priority will be given to the firms specializing in innovative developments in the sphere of artificial intelligence, uncrewed aerial vehicles, virtual reality or blockchain. Applications for funding will be reviewed by company analysts and a work permit in Great Britain - by the Department of International Trade.

Probably, by creating such a terrific environment London tries to compensate the outflow of digital capitals from the country. Because this tendency happens to be.

The first and obvious reason for the outflow of the blockchain business from England is the inconsistency of the legal system in assessing virtual assets and profits from them. This entailed a controversial and sometimes an inadequate reaction of the banking system. It should be mentioned that the accounts of some enterprises were blocked; it was motivated by the fact that they had been supposedly involved in the gambling business. True or not, from the global market point of view, it is not so important. Harsh decisions are bad for the business climate. Moreover, British justice is very expensive and for many people, months of legal battles to defend their rights would turn into a step towards bankruptcy. Therefore, a significant number of crypto companies preferred a softer and more transparent jurisdiction.

There is another obvious reason - Brexit. Britain’s exit from the EU that will be finished on March 29, 2019, may negatively affect many representatives of the digital economy. Especially those whose business is targeted at the cooperation with the state.

Participants of the blockchain startups worry that leaving the EU can entail various kinds of trouble: from additional licensing costs to loss of entry to the European market. For example, Brexit may threaten financial companies and insurers with the loss of "passport rights" to do business in the European Union. According to the representative of the European Commission on the conditions for the withdrawal of Great Britain from the EU Michel BARNIER, the British financial institutions may lose the right to freely provide financial services to 22 thousand organizations and 500 million citizens residing in the territory of a united Europe. Moreover, Brexit can cost jobs for 35 thousand financiers. So an already volatile digital market can lose potential private investors in virtual tokens.

To be fair, it must be noted that even by the worst script of acts the crypto business has the way out. In British “White Paper” – the plan of minimization of losses from the exit from the EU – there is a set of proposals for the EU on the free exchange of goods, but not services. It is an important point, because in many national European jurisdictions the cryptocurrency is defined as a property, not as a financial asset, and, therefore, will fall within the scope of the agreements.

Financial losses can be minimized but alarming expectations remain. Regardless of whether they are grounded or not, the British government decided to take preventive actions. And it is not a big deal that the local blockchain companies will have to compete with crypto labor migrants for the place under the sun. The main thing is that taxes are being deducted.

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