A leading US tech investment firm that counts Facebook and Twitter among its successful bets has backed the UK’s approach to crypto regulation as it announced plans to open a London office that will be its first outside the US.
California-based Andreessen Horowitz said Britain was on “the right path to becoming a leader in crypto regulation”. The venture capital firm’s new office will open later this year and will be dedicated to investing in crypto and tech startups in the UK and Europe.
The move comes amid a crackdown on the cryptocurrency industry in the US, where the financial watchdog is suing the world’s largest cryptocurrency exchange, Binance, in a legal complaint that accuses the company and its founder, Changpeng Zhao, of “placing investors’ assets at significant risk”.
The Securities and Exchange Commission also has a lawsuit against Coinbase, Binance’s closest rival, accusing it of operating an illegal exchange.
Chris Dixon, the head of crypto investing at Andreessen Horowitz, wrote in a blogpost: “While there is still work to be done, we believe that the UK is on the right path to becoming a leader in crypto regulation.
“The UK also has deep pools of talent, world-leading academic institutions, and a strong entrepreneurial culture.”
Rishi Sunak said he was thrilled that the firm had chosen the UK, a move he said was “testament to our world-class universities and talent and our strong competitive business environment”.
Dixon said UK politicians and regulators were taking an approach “uniquely tailored” to regulating digital assets and blockchain, a decentralised form of record keeping that tracks the ownership of a cryptocurrency but has other uses such as underpinning contracts. Last year, Dixon’s firm announced a $4.5bn (£3.57bn) fund to invest in crypto and blockchain companies.
The Treasury has published a consultation document on bringing crypto regulation in line with traditional assets such as stocks and bonds, in a process that refers to balancing “risk as well as opportunity” in the sector.
Andreessen Horowitz hopes that the Treasury’s approach to crypto regulation will set the pace globally. The EU, a leader in tech regulation, has also introduced a crypto framework, introducing a regulation on markets in crypto-assets, or MiCA.
However, there are also signs of hostility to the sector among policymakers. The UK parliament’s cross-party Treasury committee said last month that UK authorities should regulate cryptocurrency trading as a form of gambling, warning in a report that digital assets such as bitcoin have “no intrinsic value”.
The UK financial regulator is also toughening regulations. This month, the Financial Conduct Authority announced new rules for crypto advertising, including the requirement that firms promoting crypto products or services carry a clear risk warning in their adverts.
