How the UK Has Set its Sights on Becoming a Fintech Haven in the Wake of Brexit

Significant policy changes and reform of London’s company listing regime in the wake of Brexit is set to spark a “digital big bang’ in the UK in a bid to accelerate the growing fintech industry within the nation — according to a recent, government-commissioned review.

The report, published in February 2021, highlights that Brexit’s regulatory uncertainty and growing global competition could undermine the UK’s position as a leader in the world of fintech unless action is taken.

The review was carried out by the former Worldpay chief Ron Kalifa and is one of a number commissioned by the government to help strengthen the UK’s status in the world of finance and technology.

As things stand, the UK is a European leader in terms of the number of companies operating in fintech and new fintech endeavors starting out. However, complications arising from Brexit may lead to the loss of ground between the UK and the likes of Germany and France as one of the world’s favorite destinations for establishing a fintech endeavour.

Both finance and technology sectors are under greater pressure from rivals since the UK’s exit from the European Union at the start of 2021, but it’s possible that Brexit could provide a little more freedom to convert the nation into an even more appetising prospect to retain and build on the support of the developing fintech industry.

With global fintech revenue expected to reach more than $300 billion by 2022, there’s plenty of justification behind the UK prioritising its fintech industry as a key area to retain businesses and work on attracting fledgling companies. Let’s take a deeper look into how the UK looks to capitalise on the growing fintech market in the wake of Brexit.

Passport to Fintech.

The UK government will utilise a visa scheme that’s targeted at fintech professionals in a bid to fill any emerging gaps in the sector’s workforce as a result of Brexit causing a loss of access to the EU’s significant skills base.

The move has already been greeted by the fintech industry, in which many players had been concerned about access to skilled workers before the conclusion of the Brexit process.

According to a Sunday Telegraph report, chancellor Rishi Sunak will soon announce a plan to help the UK fintech sector to retain the talent it needs to continue as a world leader in the industry.

It’s hoped that the fintech visa programme will help the UK to keep its place as a prosperous location for fintech unicorns to flourish. After the exit from the EU, the UK lost its automatic right of professionals across Europe to work in the country. During the same time, many skilled European workers have left the UK due to the climate of uncertainty and negativity prompted by Brexit.

With global competition for fintech talent within the sector, cities like London face fresh competition from European destinations like Berlin, Barcelona and Amsterdam – which are becoming increasingly popular for fintech professionals with the right to work across the EU.

This exodus is exactly what the UK is looking to prevent, and the danger posed by the situation has been underlined by Ricky Knox, CEO at fintech bank, Tandem, who said: “Tech visas are a great thing and essential if we are going to keep a competitive tech and fintech sector,” he added. “Over half of our coders are from outside the UK and some have already left due to Brexit.”

Room to accommodate crypto.

Another aspect of the review has called on the UK to revise its approach to the regulation of crypto-assets as a means of welcoming more fintech businesses in the future.

Recent restrictive measures by UK regulators involve bans on the sale of crypto derivatives and an anti-money laundering register that have created a somewhat hostile environment for blockchain or decentralised finance fintech businesses to set up camp in London.

The review points out that other markets have been pressing ahead with the development of crypto-specific frameworks, like the EU’s Markets in Crypto-Assets proposals. It also states that the UK needs to act quickly to revise its position on these matters before competitors begin to overtake the tech hub.

“A bespoke regime for crypto assets should adopt a functional and technology-neutral approach, in line with the principles of the current regulatory framework, as well as the concept of “same risk, same regulation”, while being tailored to the risks arising from crypto asset-related activities,” the report states. “It should also be flexible enough to deal with future challenges — such as how Decentralised Finance (DeFi) should be regulated.”

In addition to this, the review also recommended that the UK carries on in its participation of the Global Financial Innovation Network — a working group of national…