18.05.2021

UK Cryptocurrency Firms Turn to Equity Funding as ICO Coffers Plunge 70%

By comparison, equity funding provided £168 million ($210 million) to startups in 2019, almost the same as the year before, says the report by venture capital firm MMC Ventures. In 2017, only £100 million was raised this way. Altogether, equity financing has supported emerging UK crypto businesses to the tune of £525 million since 2013.

UK Cryptocurrency Firms Turn to Equity Funding as ICO Coffers Plunge 70%

UK cryptocurrency and blockchain startups are turning focus back to conventional means of raising capital, as initial coin offering (ICO) coffers dry up. According to a new report, initial coin offering (ICO) funding last year plunged 71% to £200 million ($250 million) from £700 million ($875 million) a year earlier.

“As the ICO funding model becomes increasingly difficult, companies are shifting back to traditional capital raising strategies. This has prompted founders to place more focus on company fundamentals”, said MMC Ventures.

UK cryptocurrency entrepreneurs had scripted a promising success story over the past few years, with over 2,700 companies founded since 2008, the year of the Bitcoin whitepaper. But only 9% of the startups raised money by means of the sale of shares, as ICOs proved popular, until the bubble burst in 2018.

The report states that ICOs failed in the UK because “the majority were not interested in creating long-term value.” Equity financing demands that projects build a strong infrastructure foundation and business case. MMC Ventures said:

While capital is less abundant than it was during the ICO bubble, resources are being deployed more efciently and targeted at fundamental areas of the technology stack.

The company expects funding for UK startups to slow down through 2020 and beyond due to the coronavirus crisis. But expressed optimism that “the increasingly pragmatic, business-case-first approach of the teams in the blockchain/crypto space makes them relatively well-positioned to weather this downturn…”

UK Financial Service Provider to Coinbase, Bitstamp Awarded FCA Payments License

A company that provides financial services for cryptocurrency companies including Coinbase, Bitstamp and Galaxy Digital has been awarded a payments license by the U.K.’s Financial Conduct Authority (FCA).

London-based BCB Group announced the news Wednesday, saying its subsidiary, BCB Payments Ltd., is now the “first and only crypto-focused” company to have be registered as an Authorised Payment Institution in the U.K.

With British banks reluctant to engage with crypto firms, BCB is one of few options available. The firm said it takes a “dedicated focus on B2B payment services including business accounts and cryptocurrency market liquidity for some of the world’s largest crypto-engaged financial institutions.”

BCB Payments had been registered with the FCA since June 2018 as a Small Payment Institution, meaning it is not overseen by the regulator. The company told CoinDesk it has now been “upgraded” to an Authorized Payment Institution license, meaning the firm is now regulated by the FCA.

Related company BCB OTC Trading SARL is already regulated in Switzerland by a self-regulatory organization under the oversight of the Swiss Financial Market Supervisory Authority (FINMA), according to the announcement.

“This regulatory approval for our firm, a leading crypto-dedicated payment service provider, is a testament to how we’re able to push ahead with digital asset innovation while remaining in full compliance with some of the most stringent regulations in force globally’,” said Oliver von Landsberg-Sadie, founder and CEO of BCB Group.

The firm anticipates that the new licence will allow it to attract new international clients in the UK and Switzerland.

The issue with U.K. banks’ aversion to the crypto space came to the fore in July when Coinbase was compelled to pause British pound-denominated transactions after being dropped by Barclays. Services were only reinstated in October after the exchange struck up a new relationship with Clearbank.

As reported at the time, BCB Group is working with ClearBank to make the U.K.’s Faster Payments scheme available to some clients. BCB started providing the service for the Bitstamp exchange in July.

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