The UK blockchain sector was rocked when Brexit took place in 2020, shortly followed by the pandemic, which added further confusion as regulators tried to establish the future of the technology. Despite this turbulence, 280 investors have invested £1.8billion in total in 520 blockchain companies.
Sean Kiernan is the CEO of Greengage, the first fully integrated financial services group bridging traditional fiat currency banking and trading with the emerging digital asset and cryptocurrency sector. Kiernan spoke to The Fintech Times to summarise some of the key findings found in the updated Blockchain report:
What is the state of the UK blockchain industry today? How many companies exist, how much investment has been made into them and are there yet any real use cases for the technology that are active in the British economy?
Three years ago, a group of organisations including Greengage (then DAG Global), Deep Knowledge Group and the Big Innovation Centre published a landmark blockchain report which set out to answer these questions. In partnership with the All-Party Parliamentary Group on Blockchain, they created the first comprehensive overview of the state of the UK industry. Today that cornerstone report has been fully revised and updated with new data from all of the creators of the first report to give a comprehensive landscape overview of the post-pandemic blockchain industry as it looks in 2021.
The analysis of 18 industries using blockchain technology identifies 520 UK Blockchain-centric companies and 280 investors, who have invested in excess of $2.2billion (£1.6billion) in those businesses. And the report’s conclusions strike a positive note, arguing that the UK could become a potential epicentre for Blockchain and that it should do more to cement its position.
So, what are the key strengths on which the UK could build to make that vision a reality?
Investment confidence in Blockchain entrepreneurship is high and growing
The report argues that the UK hosts a sophisticated Blockchain innovation ecosystem across 18 industries bringing together investment confidence, talent, industry growth and Blockchain-community spirit.
The majority of the $2.2billion (£1.6billion) investment into the UK Blockchain space has been into Fintech (17%) and Crypto Trading (14%) companies. There has also been investment into Govtech (2.3%) and Insurtech (1.7%) but this is at a much lower level.
The UK also contains 53 crypto funds, making it the 3rd highest location in the world and, in terms of cornerstone investments, UK-based company Blockchain.com received over £300million in funding in 2021.
Blockchain applications are moving beyond proof of concept into use
There are now many blockchain applications and use cases being put into practice in the UK including in art, fintech, healthcare and energy. Blockchain is starting to have an impact on the UK economy, and on its public services, and is beginning to support a more sustainable livelihood for people.
According to the report: “Blockchain technology is building an interconnected world between producers and consumers in the energy sector. This will eliminate intermediaries.” For Blockchain to work in the UK energy sector, it can implement equipment such as smart meters which can supply the Blockchain with information at every stage of the energy value chain (generation, distribution and provision), as well as use smart contracts to help automate a number of transaction steps, such as payments made after conditions are met.
The UK has also started using distributed ledger technology to track the handling of covid-19 vaccines in the NHS. Earlier this year, two NHS hospitals announced they were actively using blockchain technology to help maintain the temperature of coronavirus vaccines before administering them to patients.
Facilities in South Warwickshire, England, are using technology developed by UK firm Everyware and Texas-based Hedera. Everyware uses sensors to monitor equipment in real-time, while Hedera is a distributed ledger platform whose governing council includes multinational companies such as Google and IBM.
The UK contains highly integrated blockchain innovation ecosystem of talent
The UK hosts a sophisticated Blockchain innovation ecosystem across 18 industries integrating the ingredients for a vibrant and dynamic Blockchain industry – including science, technology, and talent. A thriving entrepreneurial community exists with financial backing, blockchain business model applications supported by the advantages of London as a major financial centre.
UK Blockchain entrepreneurship, talent and investment is in close proximity with regulators
The UK in general – and London in particular – has the unique potential to become a true epicentre of purposeful, innovative, and safe international Blockchain integration and cooperation. With London arguably still the fintech capital of the world, the UK is the perfect environment for blockchain and other distributed ledger technologies.
For the industry to continue to grow and prosper, the report argues that the Government must solidify this position by passing suitable regulation and it must do so in a timely manner. DeFi’s growth globally and presence in the UK, in particular, has not gone unnoticed by UK politicians.
Since leaving the EU, the doors have also opened for alternative UK regulations to be drawn up. The EU’s Markets in Crypto Assets (MICA) directive could take years to implement. The FCA could potentially act much faster in implementing its own regulations. The report concludes that jurisdictions like Gibraltar have been fast to embrace the potential of blockchain and cryptocurrencies, becoming hubs for the industry. The question is, post-Brexit and, as it looks to ‘build back better’ after Covid, will the UK now grab hold of the chance to follow suit?