The Factom team spent significant time evaluating which jurisdiction would be best and ultimately London proved to be the most friendly and clear in terms of their approach to the sale of software for the purposes of Factom.
London, England aims to become the global domain for fintech and Bitcoin’s future growth.
While being the capital of traditional currency trading, London continues to compete with Silicon Valley and the Bay Area in California for their leadership in computing, technological innovation, and web expertise. It also competes with New York’s global leadership of the legacy financial system with the New York Stock Exchange and NASDAQ. Already a center of the $5-trillion-a-day global currency market, London sees an opportunity for the digital currency to be the next major wave of growth for the 21st century, and regulators seem eager to capture it without killing the innovative nature of it in the process.
In March 2015, the British government announced plans to regulate digital currency exchanges to prevent their use in money-laundering, and to help to develop a set of standards for cryptocurrencies. HM Treasury, the UK government’s economic and finance ministry, intends to apply anti-money laundering regulation to digital currency exchanges in the UK as part of a plan to promote the legitimate use of digital currency. The goal, according to a released document, is to support innovation and prevent criminal use.
The document summarizes the submissions and outlines the government’s next steps. It discusses the benefits, risks, and barriers to digital currency businesses, and options for government involvement in supporting digital currency.
“The government considers that digital currencies represent an interesting development in payments technology, with distributed, peer-to-peer networks and the use of cryptographic techniques making possible the efficient and secure transfer of digital currency funds between users,” the document states. “The government notes that the potential advantages are clearest for purposes such as micro-payments and cross-border transactions.”
The 77 companies and organisations that took part in HM Treasury’s initial consultation included accountancy heavyweights Accenture, PwC and Deloitte; British banks HSBC and Royal Bank of Scotland; credit card provider Mastercard; leading bitcoin industry companies Coinbase and BitPay; as well as top UK universities Imperial College and the London School of Economics.
UK Digital Currency Association welcomed the government’s proposals: “The government’s response is fantastic for all of us in the industry and vindicates our position.”
When asked about Bitcoin, the governing body for the City of London financial district declared that authorities needed to be “alive to the potential risks and take strong action if they find evidence of abuse or criminal activities.” But the employment and growth opportunities offered by the fintech in general were to be welcomed, it said.
If some may believe that London lags New York reputation as the center for traditional finance, others argue the latter’s attitude to digital currencies – including a plan to implement and impose a “BitLicense” on Bitcoin startups – makes London more appealing for the growing number of businesses dealing, or planning to deal, with cryptocurrency and blockchain technology.
“What we see in the UK… is a different attitude,” said Jerry Brito, executive director of Coin Center, told Reuters. “It’s a very positive attitude, one of: this is an amazing innovation, we’re going to have to have some regulation in terms of money laundering, but let’s do this in a constructive way, in partnership with the technologists and the industry.”
“London has been the home of financial innovation for hundreds of years,” Nicolas Cary, the co-founder of Blockchain, which provides bitcoin data and virtual wallet software for storing the currency, told the news agency. “It would be a historical mistake not to make this the home of digital currencies. There’s an incredible amount of talent and experience here.”
England made Bitcoin trading exempt from Value Added Tax last year. Other jurisdictions have yet to decide how to go about taxing Bitcoin, since its sovereignty from any central bank means it does not fall into the conventional definition of money.
Swiss banking giant UBS will imminently open a technology lab in London to explore the wider application of blockchain technology in the financial services industry.
Finance minister George Osborne stated Britain must lead the world in developing fintech, emphasizing the great potential of digital currencies.
Last year investment in fintech firms in Britain and Ireland more than doubled compared with 2013, to $623 million, representing 42 percent of such investment in Europe, according to consultancy Accenture.
London-based Barclays Accelerator, the 90-day mentoring and funding scheme set-up by Barclays Bank to back fintech startups, has selected three bitcoin companies working on blockchain-based financial solutions, to join the programme.
Seasoned US startup incubator Techstars will run Barclays Accelerator and is providing each of the selected companies with $20,000 seed funding. The three lucky bitcoin startups are: Blocktrace, focusing on the insurance sector; Atlas Card in the debit card space; and bitcoin exchange Safello.
Research Councils, Alan Turing Institute, and Digital Catapult with the industry to address opportunities that will look into the blockchain technology behind digital currencies. The government will increase research funding by 10 million pounds ($15 million).
It’s the blockchain – essentially a ledger of every Bitcoin transaction that is virtually impossible to alter – that the Bank of England has also said could be revolutionary. Central banks, it has stated, could in the future issue digital currencies of their own.
Londoners can exchange cash for Bitcoins at over half a dozen ATMs – and counting – then use them to pay for anything: a massage, designer clothes, a coffee, a meal, a pint of beer and a lot more. The number of places accepting Bitcoin payments in the capital is growing by the day. A real estate company – Re/Max – even allows rent on property to be paid in Bitcoin.
It’s good to see such a well established center for commerce being open to our community and, since Factom serves as a bridge for enterprise institutions, London is an ideal location. That’s why the Factom Foundation has chosen London for its home.