As No-Deal Brexit Looms, UK Blockchain Startups Are Weighing Options

From longer approval processes to the threat they might lose access to the European market, it's safe to say U.K. blockchain startups are looking for contingency plans.

The startup is one of the four blockchain companies that were accepted by the U.K.'s Financial Conduct Authority for a normally six-month-long sandbox test in December 2017.

Renat Khasanshyn, co-founder of Etherisc, a European firm offering decentralized insurance protocol, expects Brexit will create hurdles for users and developers of its protocol and hamper client growth.

If negotiations around Brexit falter, cross-border market testing will be much harder, and compliance costs for providers will increase, as Khasanshyn explained.

"The users of our protocol will be impacted by Brexit negatively because they will need to comply with regulations in the U.K. and the EU, which will likely go in different directions," Khasanshyn told CoinDesk.

For London-based blockchain startup Globacap, the biggest concern is likely to be the threat of the loss of passporting rights.

Richard Cohen, a U.K.-based lawyer at international law firm Allen & Overy, contended that Brexit would have little effect on the blockchain industry as a whole - in fact, he sees it as a potential positive for the country in terms of its approach to fintech.

"The U.K. will be allowed to come up with a regulatory framework that is much more favorable to fintech companies and become a friendly jurisdiction in which banks can make the best use of blockchain and global opportunities," Cohen argued.

Its actions to date - particularly through the FCA, which has sought to include blockchain and distributed ledger startups within its sandbox cohorts - bear out that assertion.

CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.