Think Gibraltar + UK + Israel + China for Fintech & Crypto

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Bernard Lunn is a Fintech deal-maker, investor, entrepreneur and advisor. He is CEO of Daily Fintech and author of The Blockchain Economy.

On Tuesday I attended some events in London promoting the nexus of Gibraltar + UK + Israel in Fintech & Crypto. I was invited by an international law firm based in Gibraltar with strong connections in UK & Israel called Hassans who are experts in legal matters around Security Tokens (see here for the 4th of a series on Security Tokens by Sheldon Freedman of Hassans). 

The two elephants in the room were America and China. First we must talk about the elephant that everybody acknowledged and was totally fed up with – Brexit. Sorry!

Don’t mention the B word

The two simple ways for a visitor to UK to annoy people are a) to tell them that the trains are better where you come from and b) ask them what they think about Brexit. 

What everyone can agree on is that politicians of all stripes have totally messed it up. 

If you run a business that requires playing defence, Brexit is a planning nightmare. For example if you work for a bank, Brexit means uncertainty and layoffs.

Brexit uncertainty is only good if you are playing offence. For example if have a disruptive proposition in Fintech & Crypto, Brexit chaos can be your friend.

Software has been eating the world of business for some time. Now software is eating the world of geopolitics and macroeconomics. 

The next global reserve currency

The transfer of power from one reserve currency to another has happened many times before. For example when Britain passed that crown to the rising economic power of America. It has never happened before when a decentralized people’s currency – Bitcoin – was a viable alternative. 

Which is where we have to acknowledge the two elephants in the room – America and China. There are three big questions:

– for how many more years will USD remain the global reserve currency? Although it is still the global reserve currency today, we know this cannot last forever.

Will CNY (China’s currency) become the new global reserve currency? China is clearly the rising economic power, but CNY is not a freely traded currency (a slight disadvantage for a reserve currency said Captain Obvious). It is possible that a Central Bank Digital Currency (CBDC) in CNY settled on the Blockchain will enable China to leapfrog the legacy FX markets and establish CNY as the new global reserve currency. That is possible but it is still too early to tell (as Chou En Lai of China maybe said when asked about the impact of the French Revolution by Richard Nixon in 1972).

will the new global reserve currency be Bitcoin or a Stablecoin like Libra or like MakerDAO? These were inconceivable options only a few years ago. 

The two elephants  – America and China – is context for thinking about the nexus of Gibraltar + UK + Israel 

The Gibraltar UK corridor

Losing the passport to Europe post Brexit makes the passport to UK essential to Gibraltar and it seems pretty secure. Despite 95% of Gibraltar people voting to Remain in 2016, they are adamant about wanting to be part of UK rather than Europe.  Although Gibraltar thinks about the UK more than vice versa, there is also value for UK businesses looking for a Blockchain friendly jurisdiction.

The UK Israel corridor

The UK needs Israel because that is where many the crypto tech breakthroughs come from. Israel needs the UK because Israel’s traditional “other home market” has been America. With America currently a bit too hostile to crypto,  Israel needs an easier market entry in the UK.

The UK maybe a stepping stone to America (business culture and language are similar). If Gibraltar offers value to UK, that journey from Israel to USA via UK may also be through Gibraltar. 

Or if America decided that crypto is a threat to USD and thus make it too hard to do business with, an alternative route for Israeli ventures could be towards China, which also could be via Gibraltar. 

Corridors are part of a network

A single node such as London or Tel Aviv or New York or Zurich or Singapore is powerful, but networks connecting nodes are way more powerful. 

Networks consist of nodes (Cities) connected by lines (corridors). 

Each node has multiple corridors.  Each corridor has human diaspora connections, which is where the Jewish history in Gibraltar is significant.

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