Majority Of Crypto Businesses Based In U.K Have Trouble Banking
U.K based firm Digital Catapult has published the findings of a research on the state of blockchain and cryptocurrency markets in the U.K.
The findings are in a report titled: Blockchain in Action: State of the UK Market, which, among other things, finds that more than half of companies face difficulties related to the opening of bank accounts.
The digital innovation center surveyed 264 DLT-based or crypto-related businesses, which the report categorizes into four groups.
These companies and businesses fall under any of distributed ledger companies, decentralized applications developers (dApps), centralized systems (which includes crypto exchanges), and service providers (such as consultancy and venture capital firms).
Among the key findings, Digital Catapult discovered that 74 percent of blockchain companies had working products, with applications in various industries and verticals. N71 percent of these companies are also said to be generating revenue.
Concerns about the regulatory environment
Like in most other jurisdictions and countries around the world, most crypto related businesses in the U.K have expressed concerns about the regulatory environment. Uncertainty is the biggest issue facing the country’s blockchain and distributed ledger technology industry.
Of the surveyed companies, about 74 percent said they were unhappy with the how the situation was currently. Most of the concerns revolve around the lack of clarity from authorities regarding crypto regulations, industry standards as well as certifications.
Other concerns relate to the difficulty in accessing legal, business, or technical advice and expertise. In this regard, 45 percent of the companies interviewed expressed a desire for additional services with respect to specialist legal advice in DLT issues.
Concerns in the ICO industry
There are also concerns around Initial coin offerings (ICOs), a phenomenon that experienced a big boom in the last two years, with thousands of projects choosing token sales as a way to raise funds.
According to the Catapult Digital, the UK ranks second in terms of total ICOs launched (10 percent), behind the US that has 20 percent.
Per the report, only 4.5 percent, out of the 264 companies and businesses the researchers surveyed, conducted an ICO for their company.
Instead, a majority, about 80 percent of project founders said they used personal funds to launch their DLT or crypto-focused companies. Overall, 41 percent of the companies raised had seed round.
Regulatory uncertainty, however, continues to affect the whole ICO market. The UK Financial Conduct Authority (FCA) has previously looked at regulating the ICOs space, but it is yet to formulate a legal framework.
Difficulties opening a bank account
Another finding related to the difficulty crypto businesses had in opening bank accounts. About 54 percent of the firms surveyed highlighted that they found it challenging to open bank accounts with legacy financial institutions.
Most of the companies have these problems due to the uncertainty surrounding cryptocurrencies, especially concerns relating to anti-money laundering (AML) and Know Your Customer (KYC) checks.
As a result of the many hurdles, most crypto businesses have had to look at offshore banks or open multiple accounts in diverse locations around the world.
Despite these challenges, the nascent blockchain technology industry has the potential to disrupt and transform industries across the UK; the Catapult report points out.
(Source: Digital Catapult)
Disclaimer: This is not investment advice. Cryptocurrencies are highly volatile assets and are very risky investments. Do your research and consult an investment professional before investing. Never invest more than you can afford to lose. Never borrow money to invest in cryptocurrencies.