It’s been a great year for the blockchain industry, but the UK needs more champions
Crypto AM editor-at-large James Bowater discusses every corner of the crypto industry with Sean Kiernan, founder and CEO of Greengage...
JB: As we reflect back at the end of 2021, do you think the year has been a good one for the blockchain industry globally?
SK: Definitely. There has been an incredible amount of attention given to the blockchain and crypto space from policymakers and central banks globally, and it seems most developed economies now are actively exploring central bank digital currencies (CBDCs). This is a huge shift from the more libertarian intentions anticipated in the founding Bitcoin whitepaper, and signals the growing institutionalisation of blockchain technology. Blockchain-focused companies that can speak this language seem well placed to support and to profit from these developments.
JB: What about the UK? The recent report you produced with the Big Innovation Centre and Deep Knowledge Analytics was positive about the UK’s prospects as a blockchain hub but what else still needs to be done?
SK: The UK has many natural strengths which make it well suited to blockchain innovation, especially the nexus of London as an international hub of finance and technology, alongside the rule of law, and our relatively clear tax and regulatory frameworks. However, several of the biggest companies in the space are based in the USA and the UK ecosystem would need to have a few native industry champions (as it has more broadly in fintech) to become an internationally competitive blockchain ecosystem in the long-term.
JB: DeFi has been a huge trend in 2021, along with NFTs and the metaverse, what trends do you see emerging in DeFi in 2022?
SK: DeFi undoubtedly grew hugely in 2021, starting the year with about $20 billion of locked value and mushrooming over tenfold (about $230 billion at time of writing) by the end of the year. We have noticed that identity as a topic within DeFi is increasingly raised as both an opportunity and as a challenge for institutional participation (namely the need to know the counterparty for the purposes of AML / KYC). If resolved intelligently, this could unlock further funds coming into the space. It seems 2022 will also bring further clarity around where DeFi sits within the regulatory perimeter, likely with some of the more nimble jurisdictions giving guidance first.
JB: Which areas do you think are strongest for the UK blockchain industry and why?
SK: Amongst all the various blockchain use cases, financial services seems the sector with the greatest prospects for real innovation in the “plumbing” of how transactions and data are stored and settled. Most innovation in fintech has happened on the front end, with digitised systems still layered on top of legacy infrastructure. Blockchain solutions represent real potential for delivering innovation to e.g. reduce risks and frictional costs in financial services. As a percentage of overall GDP, financial services in the US and the UK respectively represent approximately 7.5 per cent and seven per cent – there is much room for efficiency.
JB: Regulators all over the world are sending conflicting messages about cryptocurrency and crypto asset regulation – is the UK competitive as a place to do business for crypto entrepreneurs?
SK: In short, yes, and we have seen some additional movement, for example, with approvals on the FCA crypto asset register of firms that have passed muster. We look forward to additional regulatory dialogue and proactive support in increasing competition and services in this space to deliver on the promise of innovation that the technology represents.
JB: What plans do Greengage have for the next 12 months?
SK: We’re currently planning on rolling out UK e-money accounts (including IBANs and cards) from Q2 of next year, and additional technology and crypto-related solutions for SMEs, HNWIs, and crypto companies as well in the coming year. It’s always exciting to see how the sector evolves each year – for example, most people didn’t foresee NFTs coming at the scale that they have, and as quickly – and we intend to respond to client requirements accordingly as the blockchain ecosystem develops.