29 January 2025 , 11:04
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While crypto markets have dipped in recent days after the release of Deepseek shook US tech firms, UK companies are struggling to keep the momentum of digital finance going.
This is reported by Elliot Gulliver-Needham.
Bitcoin managed to pull itself back above the $100,000 mark this morning after Deepseek’s new AI model shook the stock prices of the Magnificent Seven; Apple, Microsoft, Google parent Alphabet, Amazon, Nvidia, Meta and Tesla, It also caused a six per cent dip in bitcoin prices yesterday.
With the crypto market boosted by Trump’s re-election, signs have begun to emerge that the strength of the US market is likely to be weakening the UK’s digital asset sector.
Last week, Eric Trump, the son of Donald Trump, teased the idea of a “zero crypto tax policy” for US cryptocurrencies, to encourage innovation and investment in the sector.
However, the proposal would only eliminate capital gains tax for cryptocurrency companies operating in the United States, with offshore crypto projects serving US users paying a 30 per cent capital gains tax.
Though the proposal has not yet received legislative support, the influence that Eric Trump has on his father has markets worried, with non-US based currencies dropping quickly in response.
Radix, one of the largest UK-based cryptocurrencies, is down by more than half over the last month, and all of the top UK crypto tokens have fallen in the last week from the news.
Meanwhile, Trump ally Ted Cruz has been challenging a new tax rule targeting decentralised finance which requires them to file tax forms reporting users’ transaction amounts, names, and addresses.
Why US crypto success may be bad for Britain
Other crypto-friendly proposals from Trump on the campaign trial, such as a bitcoin reserve law that would require the US government to own one million bitcoin, or a more friendly regulatory regime, continue to be touted by US lawmakers.
Bitcoin spot ETFs, which are banned in the UK, also keep seeing money flowing in, with the largest bitcoin ETF, Blackrock’s iShares Bitcoin Trust, holding $57.9bn (£46.6bn) in assets.
While this might be good news for US-based crypto companies, it isn’t for the UK.
Recent reporting revealed that the UK government had attempted to lure one of the world’s biggest venture capital firms, Andreessen Horowitz, to move to London with promises of a crypto-friendly regulatory regime.
The move, the “culmination of fives years of proactive account management” by the Department of Business and Trade according to documents seen by Sifted, was scrapped last week in favour of the firm focusing on the US crypto market.
While previous City minister Bim Afolami publicly allied himself with pro-crypto regulation, his replacement Tulip Siddiq has failed to make the sector a priority, allegedly cancelling several meetings with crypto companies.
In addition, most cryptocurrencies are priced in US dollars, leaving the weakening pound less able to buy the same amount of crypto as before.
Crypto firms continue to flock to the US, and with progress on digital currency regulation in the UK stalling, the trend is likely to continue.