One of the most economically significant events of recent times is Brexit, the United Kingdom of Great Britain’s withdrawal from the world’s single wealthiest trading bloc, the European Union. The UK has been a part of the EU since 1993 and part of its forerunner, the European Economic Community, for twenty years before that.
Although opinions differ on the long-term impact of this momentous event, most economists – including that minority of economists who favor Brexit - agree that British economic growth is likely to stagnate for the foreseeable future, even if the UK does manage to stay within the European common market.
Regardless of where you stand on the issue, this is a unique test case for citizens who don’t trust the decision-making of their state regulators and policy makers. Those unconvinced by the economic policies of their governments can take matters into their own hands by using cryptocurrency - an asset with no significant correlations to movements in fiat currency markets or other asset classes.
Theoretically, a UK that is no longer integrated with the EU financial system will find cryptocurrencies comparatively easier to use in trade. And if the British government engages with these technologies with courage and vision, that could create a way through the quagmire of EU trade restrictions and put the UK at the forefront of emerging financial technologies.
Brexit is an indicator of a significant popular movement distrustful of transnational institutions. That raises the possibility of cryptocurrencies like Bitcoin facilitating economic sovereignty and individual financial empowerment. If the UK does exit the EU – something that is by no means written in stone, it will need to find a way to counteract the predicted economic stagnation.
Adopting a sensible, but not oppressive, regulatory system for cryptocurrencies could attract massive amounts of money from abroad into the UK economy going forward, with national trade in digital assets making up for any shortfall from physical assets that were traded with the EU in the past. Thanks to blockchain technologies, trade in digital assets can also be settled much more quickly and securely, and without the need to hold them up in clearing houses.
Other countries have made similar approaches to embracing cryptocurrency, occasionally under far more calamitous circumstances. Venezuela created the Petro in an attempt to earn from digital assets backed by their oil and gas reserves, and offset the collapse of their economy and the Bolivar. There is also the Russian Cryptoruble and the Estonian Estcoin. The move to a national crypto token has been mooted in both Turkey and Iran.
If the UK were to release its own cryptocurrency and/or enthusiastically facilitate the trade of current iterations, it would add a lot of legitimacy to their use (the Petro was banned by the USA, for example, because of its potential for money laundering and evasion of international sanctions).
Of course, as cryptocurrency evolves and develops, trade blocs like the EU become increasingly redundant anyway. As a result, individual nation-states might see a way forward by competing to become the most prominent data and crypto hubs. This is particularly relevant in the case of small economies that otherwise wouldn’t see themselves surviving outside of the protections of a trade bloc.