Crypto seems to be having a resurgence to close out 2023. Do you think this will continue in 2024?
Yes, there’s been a revival in crypto trading activity and optimism around the asset class recently. Whilst this may have initially been driven by enthusiasm around the prospect of a US Bitcoin ETF, there are also several exciting milestones on the horizon - including Bitcoin’s next halving and Ethereum’s ‘Dencun’ upgrade.
The UK is a major part of the global crypto ecosystem, which is why I believe there will be consistent market trading volume here, especially as crypto regains mainstream attention.
How is the UK progressing towards its ambition of becoming a global crypto hub?
The UK has historically been a leader in developing and adopting cutting-edge technology. Over the last 12 months, the UK has made significant progress towards becoming a global crypto hub, with the release of HMT’s policy statement and an intention to progress crypto legislation next year.
I foresee this trend continuing in 2024, resulting in the UK being noticeably closer to its objective by the end of 2024. That said, crypto is, and should always, embody the principles of globalisation.
The UK’s ambition to be a global crypto hub should not be considered a zero-sum game, and the future will likely see several crypto hubs scattered across the world, with London playing a major role in the ecosystem.
How has the UK crypto scene evolved over the last year?
The most noticeable difference over the last 12 months has been the importance of operating inside of the UK perimeter.
Previously, crypto firms that had invested in a UK presence and local compliance firms - such as Kraken - were at a disadvantage to firms that were offering services from overseas.
However, greater regulatory clarity, including the FCA’s financial promotions regime, effectively underscored that firms serving UK clients must adhere to UK regulations. This means that compliance with UK laws has finally been rewarded.
While this benefits companies that commit resources to UK compliance, it is ultimately UK clients that win with this change. This is because they will have a much clearer understanding of which platforms, products and services meet their trading needs.
I fully expect this trend – which only really started in 2023 – to gather momentum in 2024.
What role are institutions playing in the crypto ecosystem currently? Are they more or less interested in crypto, compared to last year?
Institutional interest in crypto is often misunderstood. For a long time, the commentary was that “institutions were coming”, which became a repetitive claim that those within the industry became numb to.
In reality, institutions have been interested, and actively made strides to be involved in crypto, for quite some time.
I anticipate during 2024, the incremental gains made to offer regulatory clarity for the asset class in the UK, combined with improved product offerings, will reassure and encourage even more UK-based institutional clients to delve deeper into the ecosystem.
For example, there is growing demand from institutional investors to have competitive prime brokerage custodial solutions, derivatives products from reputable crypto companies, as well as third-party custody that would enable them to securely explore the ecosystem.
For this reason, I see institutional trading volume significantly picking up within the UK market, as more products and services come to market that meet the needs and expectations of these institutional investors.
What is the secret to crypto one day being considered successful?
To me, ironically this will be when we don’t talk about “crypto” as a standalone industry.
Similar to how there is no longer an “internet industry”, now is the time for crypto to fuse itself with different sectors; and progress has already begun.
In California, for example, the DMV has been trialing the use of NFTs and digital wallets to transform car title ownership and streamline title transfers between owners.
I anticipate 2024 will see other examples of pioneers, from all industries, using cryptoasset technology to improve the efficiency and transparency of transacting between parties in various sectors.