As I’ve indicated before, BQT.IO originated in Europe and we on the founding team are inclined to establish its legal and regulatory domicile there. Europe is, of course, a broad and diverse market with a patchwork of national sovereignties, each with its own approach to regulating cryptocurrencies and the exchanges on which they trade.
So we have a decision to make: Where exactly in this 10 million-square-kilometer (4 million-square-mile) amalgam of three-quarters of a billion people swearing allegiance to 50 different nation-states should BQT put down roots?
If you’d have asked me three years ago, I’d have said the answer was obvious. Sadly, the leading contender took itself out of the running.
The offal truth
London is a great town. I love it there. It’s a cultural treasure trove. It’s one of the top three financial centers in the world, as the money follows the sun to New York then on to Hong Kong. This is the location from which longitudes east and west are calibrated at 0°, rendering the city the literal center of the world by global acclaim. London is not only the largest city in England and the largest city in the United Kingdom but also, as things stand today, the largest city in the European Union.
It’s also a place where, historically, things go wrong.
London burned down 11 times over the course of its long history — four of those events have been called “The Great Fire” until the next Great Fire came along. (The one you’re thinking of happened in 1666. The most recent was in 1940 but history consigns it to being just another aspect of the Battle of Britain.) All of London was shuttered for the Black Death of the 1340s, at least half a dozen times due to other plagues and once, in 1528, for something called “the English sweating sickness”. In between, London has seen its share of deadly heatwaves, freezes, earthquakes and tornadoes. And, while we’re at it, let’s note that Scotland Yard never did catch Jack the Ripper, and we mustn’t forget the unmitigated disaster that was the 2012–13 Queens Park Rangers.
But the closest London ever came to actually becoming uninhabitable was the summer of 1858. That’s when industrial effluent and human bodily waste simmered along the River Thames at ambient temperatures that rose as high as 48°C (118°F). Cholera ran rampant and thousands died. All the lime chloride in the world couldn’t make a dent in the overpowering stench.
In all of world history, there was one “Great Stink” and it was in London. How bad does a city have to smell to gain such a distinction? Look, I spend a lot of time in Dallas these days — the place they send your car if it fails to pass emission standards. The whole town reeks like the end of the day at a Midas Muffler shop.
Ever been to Bangkok? The local delicacy if a fruit called durian, which recalls rotting onions with notes of turpentine. It’s why you hire a local to do your greengrocer shopping for you. And Venice? Keep calling them “canals” if you find that more romantic, but you know perfectly well your gondolier is serenading you and your lover as you tour a maze of overflowing sewers.
And yet the people of Dallas, Bangkok, Venice and every other city that has a signature odor tough it out and maybe even learn to love it. So that’s how bad Great Stink had to be. You could say it was the worst thing that ever happened to London.
Brexit, a contraction for “British exit” from the European Union, was the result of a close referendum on whether or not to remain in the political and economic confederation. A 2016 referendum of voters in the United Kingdom narrowly approved the measure.
The best line I heard about the surprising outcome came from comedian Bill Maher.
“Forty-eight percent voted for Sense and Sensibility,” the Real Time host said shortly after the plebiscite, “and 52 percent voted for Pride and Prejudice.”
Apparently, somebody on his staff reads Jane Austen. (No way it’s him. He doesn’t have enough class to drive Mr. Darcy’s carriage.)
Determining the will of the British public was only the first step. There’s no end to the details that had to be negotiated. As of this writing, the EU has approved the deal but it faces an uphill slog in Westminster. But it’s likely to come down to the choice between an agreement that takes into consideration the uncontestable facts that the EU and the UK are inextricably linked by trade, blood and proximity, and a failure to agree which basically means two multitrillion-dollar developed economies just “ghost” each other on March 29.
Before we even think about what this means for cryptocurrency, let’s understand what a bad idea this is for financial markets more broadly. The Organization for Economic Cooperation and Development — the club for wealthy countries — says that Brexit will cost the EU 1.5% of its economic output and cost the UK 4%. The difference? Financial services is a higher percentage of the UK economy, and that’s likely to be the hardest-hit sector. Money-center banks are renting space in Amsterdam and Dublin to house their EU accounts that might not be able to be serviced out of London anymore. Amsterdam has its own charms, sure, but it’s not even half the size of London. And Dublin? Well, suffice to say there are fewer people in the entire Republic of Ireland than there are people on the Tube during rush hour. The bankers who have to move from London to these second-tier cities are thrilled. Just thrilled.
But it gets worse for those involved in digital assets. Incidentally, Coinbase is moving its London operations to Dublin.
The EU has been doing better than most other jurisdictions in the developed world to keep up with crypto. The prevailing mood in Brussels is to harmonize regulation, taking it out of the purview of individual states. That way, there’s less opportunity for arbitrage based on tax or know-your-client concerns.
This ought to be good news for the UK, which now has the opportunity to chart its own course and put forth a regulatory scheme to compete with Malta, Estonia and all the other crypto-friendly enclaves in Europe that could find themselves overruled by the EU. But Britain has clearly been heading the wrong direction on this.
To the extent it’s been moving any direction at all. While central banker Mark Carney has taken a posture of benign neglect in his role as an advisor to the G20, he’s much more caustic when speaking as governor of the Bank of England.
“How well do cryptocurrencies fulfil the roles of money?” he hypothetically asked Scottish economists earlier this year. “The long, charitable answer is that cryptocurrencies act as money, at best, only for some people and to a limited extent, and even then only in parallel with the traditional currencies of the users. The short answer is they are failing.”
More recently, the House of Commons commissioned a report that echoes Carney’s misgivings. It also underscores the utter confusion in London about whose job it is to police crypto.
“The UK Government and financial services regulators appear to be deciding whether they will allow the current ‘wild west’ situation to continue, or whether they are going to introduce regulation,” the report reads. “The current ambiguity surrounding the Government’s and the regulators’ positions is clearly not sustainable.”
Although the report suggests the Financial Conduct Authority as the logical regulatory enforcer, the FCA has not yet stepped into that role which continues to be unfilled.
Which brings us back to the Great Stink. It was unavoidable when you consider how old the London sewer system was, that public health authorities still had no clue that cholera was waterborne, and that flush toilets weren’t going to be just another fad. Still, one reason it went on so long and got so bad was the way British bureaucrats — in contrast to the European or American “deep states” — seek to limit their portfolios rather than expand them. Prior to 1858, there were eight different authorities who could have stepped in (so to speak), but each commissioner was convinced this was really the job of the other seven.
The BQT.IO team hasn’t made a decision yet about where we’re going to set down final roots but Malta is our choice of exchange subsidiary. Even so, we’re disinclined to make it the UK at this juncture. This is due, in fairly equal parts, to its fairly antagonistic regulatory environment toward cryptocurrency and its decision to pursue an isolationist trade and financial course in a time when blockchain and other technologies are blazing a path to a more integrated world.
Retreat isn’t always the wrong decision. Strategic withdrawal is often the only viable option. Still, those who hold positions of authority on this scepter’d isle need to be reminded what Winston Churchill had to say on the subject in the wake of the Miracle of Dunkirk. I think it applies equally well to this new departure from the continent:
We must be very careful not to assign to this deliverance the attributes of a victory. Wars are not won by evacuations.
Edward is an Ernst and Young Entrepreneur of the Year Finalist, Blockchain Enthusiast and visionary behind many successful organizations. An avid entrepreneur, Edward has a knack for designing distinctive business models complemented with superior technology to deliver unparalleled service and profitability. Edward also has been advising and consulting for various successful Blockchain technology and ICO projects and recently launched his own BQT.IO P2P exchange helping traders connect with each other to leverage their crypto assets.
BQT.IO has been in development since March 2017 and its ICO launched September 18. The information can be found online at BQT. IO. IO. io and on Twitter as @BQT.IO_ico.