Startup group unveils strategy for tapping into £40 billion crypto and Web3 potential in the UK

The burgeoning crypto world has captured the attention of major players and regulators in the UK, leading to significant growth. However, according to recent research conducted by the Startup Coalition, previously known as the Coalition for a Digital Economy (Coadec), a group that advocates for Britain’s technology startups and scaleups, this growth is just the tip of the iceberg.

In its latest report titled “The Economic Potential of Decentralisation,” the Startup Coalition predicts that by 2035, the UK could reap £40 billion in economic value from the crypto and web3 landscape. The report identifies the increasing use of stablecoins, decentralized ledger technology (DLT) for user-generated content like social media, and the convergence of blockchain and artificial intelligence as the primary drivers of this economic boom.

While the Financial Conduct Authority (FCA) has initiated work on regulating crypto and web3 technologies, definitive policy papers are not expected until at least 2026. The absence of a robust and decentralized regulatory framework in the UK is discouraging startups from entering the sector, prompting them to seek opportunities in the US where regulatory standards for cryptoassets are more established. To address this gap, the Startup Coalition has outlined a set of recommendations for the UK to stay competitive in the evolving landscape.

Marcus Foster, head of policy campaigns at Startup Coalition, emphasized the importance of prompt action, stating that “The Government is rightly using any levers it can to generate economic growth, in line with their core mission. Our report proves that crypto and Web3 can make a huge contribution to our economy – but only if action is taken now to allow startups to decentralize.”

The Startup Coalition advocates for the UK to:
– Develop frameworks for the new era of the internet
– Establish an objective and transparent framework for assessing decentralization to ensure that protocols adhere to stringent standards before being classified as such.
– Explicitly exempt airdrops from licensing and disclosure requirements to foster innovation among early-stage crypto startups.
– Tailor disclosure requirements for cryptoassets based on their risks and degree of centralization.
– Introduce measures to prevent market abuse, such as implementing a mandatory post-listing lock-up period for insiders to curb market manipulation in systems that are not yet fully decentralized.

Foster concluded by urging the government to act on the recommendations put forth by the Startup Coalition to unlock the potential £40 billion economic opportunity that awaits the UK in the crypto and web3 space. With the right regulatory framework and support, the UK stands to benefit significantly from the burgeoning crypto ecosystem.