After years of planning and plotting, The Great Britain has finally left European Union. This Brexit topic has not only divided Britain and Europe, but also a lot of others worldwide, who are now worried about what effects Brexit will have on Bitcoin and the rest of the cryptocurrency industry.
This event is expected to bring about a big shift in the global economy on top of several unforeseen reverberations. It also begs the question, will this geopolitical cause have any impacts on bitcoin and crypto?
The obvious prediction is that European, British and the world markets will make a shift; up or down depending on the side, you are on. However, in the background, a discrete and decentralized financial market is beginning to blossom in mutuality to what happens in the traditional financial sector.
The position of Bitcoin during the post-Brexit period is a topic of great significance in Europe. More so, the break-off of the UK; a major Fintech hub; will have a huge effect on the free flow of cash, investing and general transactions. Some good news to the cryptocurrency industry is that; all of a sudden, Bitcoin looks like a great alternative to all those who would be negatively impacted by this move.
Will Brexit affect Digital Currencies Prices?
Well, over the last few months during times of international uncertainties such as the falling economy of Argentina, US-China trade wars, the recent tension between the U.S. and Iran; the cryptocurrency industry seemed to be doing even better. In other words, the industry seems to benefit from Chaos. Some analysts believe that Bitcoin may reach a new high during the Brexit period.
During an interview with the Independent back in 2019, Luno Cryptocurrency exchange CEO Marcus Swanepoel noted that crisis contributes to the price of Bitcoin. As per him, the Argentinian crisis and the trade-war during the time contributed to Bitcoin breaking the market trend by breaching the $10,000 resistance level.
“After lacklustre trading over the weekend, bitcoin went against the market trend yesterday, quickly breaking through the $10,000 level and reaching $10,500,” Swanepoel said.
“Today the focus will be on Europe and the Brexit developments in the UK, as well as the deepening crisis in Argentina. After the Labor Day holiday in the US, all markets are open, and we can expect to see volumes rising in what is normally the busiest trading month of the year.”
Moreover, with the Brexit being viewed as an impermanent financial hand-brake, British investors could easily start focusing their regard to the virtual currency space instead of European investments. Well, Brexit will make European investments difficult to attain, less attractive and even harder to operate.
On the same token, the price boost may be minimal because British investors only make up an insignificant portion of the global numbers related to Bitcoin investments. According to William Thomas, CEO of exchange Cryptomate:
“I would expect to see some upward movement on BTC/GBP markets shortly after the deadline, but since the British pound is a small portion of global crypto volume it may not have a large overall effect on price as some have predicted. It will, however, have a positive impact within the British market, but the degree to which this will affect the global cryptocurrency markets is speculative at this time.”
The post-Brexit Regulation of Cryptocurrencies
On the other hand, the effects of regulations and logistics on cryptocurrency companies operating within the UK are practically indisputable. Its effect on the prices of cryptocurrencies is much more debatable than its impact on regulations.
In reality, the regulatory results of Brexit and the distinct regulatory trail that may probably take place in the UK and the European Union; could have significant repercussions for cryptocurrency firms based outside the UK and wish to continue operating there. In other words, Cryptocurrency firms will have to make serious adjustments and many have already completed their post-Brexit preparations.
Particularly, Coinbase will be making alterations to its e-money service due to Brexit. Additionally, the exchange will switch banks to the Central Bank of Ireland. Back in October, Coinbase did receive an e-money license from the Central Bank of Ireland to adjunct its London operations. With Brexit now a reality, Coinbase is trying to move its business to Ireland. However, it will still be inclined to its U.K. users.
In conclusion, Brexit may not bring the topsy-turvy legal turmoil as expected. However, with the 11-months transition period after January 31st, cryptocurrency firms will have enough time to clear any legal ambiguities.
