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Speaker 1: I'm Stacy Marie Ishmael, Managing editor of Crypto for Bloomberg News,

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Speaker 1: and this is Bloomberg Crypto at Daily Bloomberg I Heart Podcast.

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Speaker 1: It's Friday, June tenth. In January, the United Kingdom officially

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Speaker 1: withdrew from the European Union. The fallout from Brexit, as

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Speaker 1: we all came to know it, is still being measured

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Speaker 1: across all industries. Some analysts predict it will take years

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Speaker 1: to fully understand the impact of Brexit on the UK economy.

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Speaker 1: Brexit even affected the crypto market, especially as far as

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Speaker 1: regulations are concerned. Bloomberg reporter Emily Nicole sees cautious optimism

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Speaker 1: among investors about the UK's approach to crypto regulation. She

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Speaker 1: joins me, now, Emily, thank you so much for joining

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Speaker 1: us today. Tell our listeners a little bit more about

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Speaker 1: the frankly fascinating landscape for to regulation in the UK,

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Speaker 1: Like what what is going on and as we like

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Speaker 1: to see in the US on the other side of

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Speaker 1: the pond. I think it's one of the more complex

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Speaker 1: regulatory landscapes that we've got going so far. That may

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Speaker 1: just be my perspective because I cover it, so I

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Speaker 1: know what's going on, um, But it's one where we've

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Speaker 1: had a lot of ups and downs and definitely a

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Speaker 1: lot of different players in the mix. So at the

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Speaker 1: moment crypto is largely an unregulated space. In the UK.

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Speaker 1: We have one main financial regulator here, the Financial Conduct Authority,

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Speaker 1: and then there's obviously also the government as well that

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Speaker 1: provides some some guidance there. Um. The regulator has done

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Speaker 1: its best, I guess they would say to regulate the

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Speaker 1: crypto space, trying to provide frameworks for crypto companies in

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Speaker 1: terms of money laundering regulations um and giving them kind

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Speaker 1: of space to innovate, while also providing a somewhat firm hand.

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Speaker 1: But mostly that has amounted to just continually warning consumers

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Speaker 1: that they could lose all their money if they invest

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Speaker 1: anything in cryptocurrencies, and not so much in terms of

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Speaker 1: providing consumer protections or any recourse there for investors. So

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Speaker 1: you would consider that more on the framework of consumer

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Speaker 1: advisory rather than consumer protection. You would say, yes, for sure,

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Speaker 1: there's there's definitely no real option for consumers if they

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Speaker 1: lose money in crypto at the moment. There's no insurance schemes,

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Speaker 1: there's no official licensing for crypto companies. UM, So if

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Speaker 1: you're an investor in the UK in crypto, it's as

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Speaker 1: good as anywhere else pretty much. Well, I do want

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Speaker 1: to ask you about that, because you know, one of

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Speaker 1: the things, especially after Brexit, that seemed to be or

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Speaker 1: I say, seemed that that looked like it might be true,

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Speaker 1: was that the UK was trying to set itself up

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Speaker 1: as a hub for crypto. Right that and based on,

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Speaker 1: for example, it's previous regulatory history of being a hub

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Speaker 1: for fintech. Fintech short full financial technology refers to the

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Speaker 1: use of digital technology, are replacement enhance traditional financial services.

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Speaker 1: So are you saying that that is is or isn't

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Speaker 1: happening from your perspective, I think from from the perspective

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Speaker 1: of people I've talked to in the industry, the UK,

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Speaker 1: as you said, it was known as a fintech powerhouse.

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Speaker 1: It still is. It's definitely the part of the tech

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Speaker 1: sector here that attracts the most investment every year. Um.

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Speaker 1: But that hasn't necessarily extended itself over to crypto. Brexit

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Speaker 1: is one part of that. A lot of people thought,

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Speaker 1: you know, the idea of Brexit was that the UK

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Speaker 1: would get regulatory freedom from the EU will be able

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Speaker 1: to write its own rules. But actually, over the last

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Speaker 1: few years since we voted to leave in Brexit has

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Speaker 1: meant that the Financial Conduct Authority and the government have

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Speaker 1: had far too much on their plate to really even

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Speaker 1: think about crypto. So while fintech was in its earliest days,

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Speaker 1: they were able to pay a lot of attention to it,

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Speaker 1: considered the best way to help in industry innovate and

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Speaker 1: create new technologies while keeping everything kind of under wraps

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Speaker 1: and supervised. Um, those early years for crypto passed by

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Speaker 1: and there wasn't really much attention paid to it at all. So,

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Speaker 1: you know, in the early days of fintech, and when

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Speaker 1: we talk about that, we're talking about companies like PayPal

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Speaker 1: or online banks or you know, other folks that are

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Speaker 1: putting the finances and technology as it were. Whereas right now,

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Speaker 1: what are the some of the equivalent kinds of companies

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Speaker 1: in crypto operating in the UK that perhaps we're expecting

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Speaker 1: to have more of a sort of a friendly or

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Speaker 1: accommodative regime. So there are obviously a few companies that

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Speaker 1: would style themselves as crypto banks. Um, there are some

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Speaker 1: fintech companies in the UK that offer banking services and

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Speaker 1: crypto trading on the side, like Revolute Um, and actually

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Speaker 1: offering the crypto services has not been much of a

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Speaker 1: help to them when trying to get an official banking license,

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Speaker 1: because it's something that the regulators are still aren't comfortable

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Speaker 1: saying yes, okay, that's a part of your business that

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Speaker 1: will accept or assesss fit and proper um. I think

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Speaker 1: the area where crypto companies have mostly been over overseen

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Speaker 1: by the regulator here is um in the world of exchanges,

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Speaker 1: but specifically limited to kind of asset management or brokerage.

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Speaker 1: So earlier companies in this space, like u Toro for example,

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Speaker 1: had a digital brokerage license, which meant that they could

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Speaker 1: offer you know, stock trading, and they kind of got

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Speaker 1: in that way a bit like a robin Hood kind

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Speaker 1: of model, and when they started offering crypto on the side,

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Speaker 1: it was considered separate. But when when it came time

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Speaker 1: to start seeking guidance from the FCO over anti money

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Speaker 1: laundering rules or any of the other places that they've

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Speaker 1: started to look at in crypto, they already had that

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Speaker 1: relationship and that rapport established, which definitely helped them UM,

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Speaker 1: where other crypto companies got no help at all. Let's

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Speaker 1: take a moment to listen to the UK Secretary to

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Speaker 1: the Treasury, John Glenn. He was recently talking to Bloomberg

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Speaker 1: Technology about how the government in the UK is thinking

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Speaker 1: about these regulations as it relates to crypto. Let's listen. Well,

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Speaker 1: I think we've got to accept that this is going

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Speaker 1: to be a great opportunity. We've got to regulate to

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Speaker 1: innovate those so we've gripped it in the UK. I

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Speaker 1: made a each last Monday and I announced the number

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Speaker 1: of interventions we want to bring industry together with our regulator,

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Speaker 1: with government so we can work out the best steps

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Speaker 1: to take this interesting phenomena forward because it has many

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Speaker 1: applications both for financial services and to the wider economy.

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Speaker 1: And so I'm excited about that and I'm pleased that

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Speaker 1: we're able to get that engagement with industry both here

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Speaker 1: and in London in order to drive it forward. Well,

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Speaker 1: you know, to your point um, so much of regulation

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Speaker 1: is really about relationships. Who you know, who you can

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Speaker 1: successfully lobby, And certainly various of these companies have been

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Speaker 1: finding because they haven't been successful with their efforts or

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Speaker 1: they're not getting the attention and they think they deserve

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Speaker 1: They're looking to other financial centers. Dubai is a huge

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Speaker 1: one for crypto. You know, they have some very attractive

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Speaker 1: propositions to potential crypto folks. Switzerland is always always on

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Speaker 1: folkus as radar. What is it about these financial centers

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Speaker 1: that are causing people to reconsider their commitment to the UK.

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Speaker 1: One thing that the UK did do that others haven't

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Speaker 1: on cryptoregulation was explicitly banned retail investors from accessing crypto

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Speaker 1: derivatives products. Now, if you look at somewhere like Europe,

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Speaker 1: crypto derivatives have been a very big part of the

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Speaker 1: ecosystem for quite a few years. They've been around since

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Speaker 1: about twenty fifteen, and as we know now with the

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Speaker 1: with the US fight for a Bitcoin ETF, it's definitely

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Speaker 1: touted as the way that institutional investors will get access

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Speaker 1: to crypto because they can use listed products that will

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Speaker 1: track the price of something like bitcoin without actually having

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Speaker 1: to hold it. When the UK decided to ban those

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Speaker 1: products retail investors, it also inadvertently created the environment where

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Speaker 1: clearing houses weren't that comfortable with listing them, even for

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Speaker 1: just professionals. UM and it made life difficult for for

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Speaker 1: companies like you Toro, for example, who offered them already.

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Speaker 1: And that's one area where Europe has been able to

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Speaker 1: pull ahead. Switzerland is one of the biggest hubs for

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Speaker 1: these exchange shaded products on crypto. It's got a lot

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Speaker 1: of space there. It's also got an area like Cirque,

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Speaker 1: which is known as Crypto Valley um. And so when

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Speaker 1: this year when companies were struggling to get permissions from

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Speaker 1: the f c A to remain operating in the UK,

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Speaker 1: they had to meet certain anti money laundering requirements and

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Speaker 1: more than crypto companies that applied struggled to do that.

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Speaker 1: They basically faced the decision of downing tools and stopping

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Speaker 1: the business or moving the part of the business that

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Speaker 1: would be considered under that regulated part of crypto abroad,

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Speaker 1: and Switzerland was one of the key cups, alongside places

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Speaker 1: like Croatia and Dubai. As you mentioned, got it now

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Speaker 1: downing tools throwing toys out of the prom You know,

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Speaker 1: various folks have had perspectives on if this was a

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Speaker 1: a commensurate response to moves by by the Sea and

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Speaker 1: Treasury and others. But you know, you you in the

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Speaker 1: course of your reporting, you talked to a lot of

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Speaker 1: the folks in the market, what specifically are they saying,

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Speaker 1: would would the f C or the Treasury have to

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Speaker 1: be doing or have to be trying harder on to

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Speaker 1: recreate it that impression that the UK is an attractive

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Speaker 1: place for these kinds of companies, particularly ones doing the

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Speaker 1: more complicated products. So in the last few months the

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Speaker 1: Treasury announced that it wants to be a global crypto hub,

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Speaker 1: which I think was definitely the first start. A lot

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Speaker 1: of crypto companies that I spoke to said, you know,

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Speaker 1: even if we find other parts of crypto regulation the

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Speaker 1: UK incredibly difficult to deal with, you're only ever going

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Speaker 1: to take a message like that from the Treasury as

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Speaker 1: a positive. So that that was kind of the start.

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Speaker 1: But since then there have been a lot of moves

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Speaker 1: to basically get the ball rolling on putting actual regulation

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Speaker 1: in place for crypto and one of those was a

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Speaker 1: Crypto Sprint by the f C A which is like

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Speaker 1: a two day event where lots of crypto executives but

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Speaker 1: also interested parties in the space like lawyers and accountants

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Speaker 1: and consultants are all invited into a room with top

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Speaker 1: staff from the FCA to talk about crypto and what

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Speaker 1: it is that they need from the regulator and vice versa.

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Speaker 1: Um topics that they discussed their according to some of

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Speaker 1: the people who went, are things like, you know, whether

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Speaker 1: there is already kind of de facto crypto regulation in

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Speaker 1: place that the exchanges are having to be the guardians

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Speaker 1: of because they act as almost the gatekeepers to the

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Speaker 1: industry and deciding which projects to this and therefore which

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Speaker 1: tokens consumers get access to. They also were very concerned

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Speaker 1: about custody and whether the essay wants to regulate that

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Speaker 1: that's something that's already regulated in countries like Germany um.

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Speaker 1: And they were very concerned about stable coins as well,

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Speaker 1: particularly in the context of terrorist collapse, and whether regulators

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Speaker 1: should demand more transparency over which assets or algorithms are

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Speaker 1: backing slash supporting these coins. Well, Emily, thank you for

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Speaker 1: giving us a lay of the land of that digital

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Speaker 1: or hopefully digital landscape in the UK as it relates

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Speaker 1: to crypto regulation. Any kind of closing teakaways for someone

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Speaker 1: who is trying to learn more about what they should

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Speaker 1: understand about crypto, and I think regulation is you know,

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Speaker 1: while some people would say it's boring. I think it's

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Speaker 1: the key thing to pay attention to here because the

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Speaker 1: crypto investor market is large, stable, it grows in ebbs

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Speaker 1: and flows like anywhere else. Um. But regulation is the

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Speaker 1: place where the UK is really trying to stand out

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Speaker 1: or be different, and over the next twelve months is

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Speaker 1: when there will kind of be a calling card. We

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Speaker 1: spoke to the former Chancellor Philip Hammond back in January

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Speaker 1: who kind of said if the if the UK doesn't

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Speaker 1: get ahead in crypto or just even figure out what

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Speaker 1: it's doing by the end of this year, there will

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Speaker 1: be no coming back from that. UM. So definitely the

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Speaker 1: next twelve months are very crucial on that slightly foreboarding note, Emily,

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Speaker 1: thank you very much for joining us today. Really appreciate

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Speaker 1: having you here. You can find more of Emily Nicole's

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Speaker 1: reporting on the Bloomberg Terminal, on Bloomberg dot com and

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Speaker 1: on Twitter at Emily J. Nicole. That's n I C

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Speaker 1: O L L E. We'll be right back for a

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Speaker 1: look at what makes investors in the UK crypto market

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Speaker 1: excited and maybe a little bit nervous. So what exactly

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Speaker 1: are UK investors in the digital asset landscape encouraged by

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Speaker 1: these days and what are they wary of? A regulatory

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Speaker 1: framework for cryptocurrencies is beginning to take shape. I think

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Speaker 1: what we're seeing effectively the opportunity of leaving away from

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Speaker 1: traditional kind of transition into how can we create legislation

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Speaker 1: for what we want to do kind of going forward.

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Speaker 1: That's Blair Holiday, the UK head of the cryptocurrency exchange Gemini.

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Speaker 1: Blair joins us now. Blair, so good to have you.

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Speaker 1: Thank you for joining us today. Absolute a lot it

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Speaker 1: to be here, thank you. So first I'm going to

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Speaker 1: ask you are the UK head of Gemini, which is

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Speaker 1: a crypto exchange. Can you say a little bit more

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Speaker 1: about what it is that you and Gemini do? Exactly

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Speaker 1: absolutely so. Gemini is a crypto exchange and custodian. We

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Speaker 1: are founded in the US have We've been in the

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Speaker 1: UK for about two years now, where a one of

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Speaker 1: the few firms that have an f C a crypto

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Speaker 1: asset registration. We're also authorized as any money institutions, so

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Speaker 1: effectively we enable customers to buy, sell, and still crypto

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Speaker 1: on our platform. And so you mentioned both retail and institutional,

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Speaker 1: which means you have like lots of people who regulate you,

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Speaker 1: I would imagine given the variety of customer bases that

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Speaker 1: you have, can you say a little bit more about

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Speaker 1: what you think the regulatory landscape in the UK is like,

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Speaker 1: especially post Brexit as it relates to crypto companies like

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Speaker 1: the one you are at, you know, in terms of

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Speaker 1: the opportunities kind of coming further down the line, the

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Speaker 1: UK about a month or so ago, through John Glenn

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Speaker 1: announced it's intent to make the UK a global crypto hub,

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Speaker 1: and on the back of that the the f C

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Speaker 1: a ouncer f C a crypto sprint, and then Brexit

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Speaker 1: obviously has occurred, and now it's a period of time

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Speaker 1: that has effectively traveled whereby the UK it's kind of

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Speaker 1: effectively moved further down. It's transition out of the EU

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Speaker 1: into a situation action work and start to develop more

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Speaker 1: of its its legislation, and crypto being an obvious one

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Speaker 1: for them to get into. So I think we're incredibly

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Speaker 1: exciting time for legislation in the UK, specifically in the

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Speaker 1: in the crypto space. So to your point about the

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Speaker 1: landscape that you want to see, what are some specific

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Speaker 1: things that you might be hoping will come out of

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Speaker 1: that sprint? Well, I think clarity. I think clarity and

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Speaker 1: nuance are those things in contradiction. Okay, So what I

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Speaker 1: mean by that is that I think there's a kind

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Speaker 1: of a recognition that the framework is there when it

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Speaker 1: comes to regulation in the UK. The f c A

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Speaker 1: is a principle's plans to regulated and those principles can

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Speaker 1: certainly be adopted in a wide ranging different areas of

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Speaker 1: financial services. So I think what we'll you know, what

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Speaker 1: we'd like to see is the opportunity to crypto has

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Speaker 1: to expand and have some of those principles kind of

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Speaker 1: adapted and introduce into the into kind of a more

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Speaker 1: fuse of regulation requiring or enabling firms to seek regulatory

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Speaker 1: approval within the UK. And that doesn't mean it needs

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Speaker 1: to be easy. We understand that the amail process of

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Speaker 1: these administration process was challenging and sets a high bar,

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Speaker 1: and we support that and we you know, we welcome that.

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Speaker 1: Gemini is an interesting position because, as you mentioned, started

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Speaker 1: in the US, is now operating the UK has a

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Speaker 1: lot of visibility into the European landscape. Is there anything

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Speaker 1: about the fact that no two countries or areas seem

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Speaker 1: to have the same approach to crypto that makes your

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Speaker 1: life more complicated. What we've definitely kind of seen from

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Speaker 1: the look from the UK, the US and the U,

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Speaker 1: there is definitely a desire for agile regulation. All of

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Speaker 1: us the working crypto understand how quickly it can change

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Speaker 1: and having having legislation planned without kind of having the

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Speaker 1: ability to adjust that will be problematic in this environment

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Speaker 1: because it was a quick moving environment. So look, we're

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Speaker 1: certainly excited by the regulatory landscape across the board. And

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Speaker 1: just as a kind of a closing thought, what do

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Speaker 1: you think is the biggest current selling point that UK

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Speaker 1: regulators have, Like nothing else changes that, you know, we're

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Speaker 1: not talking about future regulations. Why are people there right now? Talent?

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Speaker 1: The UK has a terrific level of talent. It's a

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Speaker 1: traditional hub for financial services. It's also an incredibly versioning

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Speaker 1: environment for fintech. The UK has, for example, prior to breakfit,

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Speaker 1: had more email institutions than the rest of the combined.

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Speaker 1: So that talent in fintech is there. The talent in

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Speaker 1: traditional finances there, so there's a tremendous opportunity in terms

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Speaker 1: of talent to be acquired by crypto firms. We've seen

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Speaker 1: that with our own hire, and we've seen incredible talent

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Speaker 1: from a variety of different industries come on board. As

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Speaker 1: well as that, you also have a government that is

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Speaker 1: very much kind of peddling towards a pro crypto stance,

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Speaker 1: So the opportunities from the UK for crypto have never

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Speaker 1: been bright. Well. On that unusually positive notes, I gotta

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Speaker 1: say thank you again. I appreciate you taking the time

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Speaker 1: to be here. Thank you very much for a pot

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Speaker 1: of me. On the next episode of Bloomberg Crypto. Have

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Speaker 1: you ever heard the saying everything is bigger in Texas?

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Speaker 1: The same applies to mining bitcoin in the state. The

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Speaker 1: States of Texas is flush with bitcoin miners, including the

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Speaker 1: city of Fort Worth that started a small mining operation

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Speaker 1: out of its city hall. Tomorrow, I'll talk with Bloomberg

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Speaker 1: report to Mike Smith about what makes the state so

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Speaker 1: attractive to crypto enthusiasts, and you'll hear from Lee bratcha

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Speaker 1: head of the Texas Blockchain Council, who will share more

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Speaker 1: about that partnership with the City of Fort Worth. I'm

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Speaker 1: Stacy Marie Ishmael, and this is Bloomberg Crypto, a daily

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Speaker 1: podcast from Bloomberg and I Heart Radio for more shows

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Speaker 1: from I Heart Radio, visit the I Heart Radio app,

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Speaker 1: Apple Podcasts, or wherever you get your podcasts. Email your questions,

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Speaker 1: comments or suggestions to Crypto at bloomberg dot net. Follow

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Speaker 1: us on Twitter We're at Crypto. The supervising producer and

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Speaker 1: editor of this episode is Vicky Verglina. Our producer is

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Speaker 1: Mohammed Farouk. Zan Abdiki is our associate producer. Desk to

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Speaker 1: wander At is our engineer. Original music by Leo Sidron.

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Speaker 1: Bloomberg's head of Podcasts is Francesco Levi