Note from the Publisher:  This story actually has several sub-stories, one of which is an exploration as to why originally SF-based fintech Epiphyte moved from Silicon Valley to London a few years back (answer: better regulatory environment).  Let that story alone be a lesson in and of itself.  However, the main story we wanted to focus on is how the UK's regulatory body - the Financial Conduct Authority (FCA) is actually HELPING new fintechs get going under thier innovative sandbox program, post-Brexit.  American regulators, take heed. 

"Brexit may have wounded London’s reputation as a leading hub for financial-technology companies, but now an unlikely hero is helping to protect its edge: the U.K. regulator.

Take SETL, a startup that seeks to harness blockchain technology. The London-based firm says it became the first to use the digital ledger, which is the same architecture bitcoin uses, to process a retail transaction using fiat, government-issued currency. The company’s chief executive officer says the U.K. regulator helped it sprint ahead.

'London is a financial center for fintech, and regulators get enormous credit for that,' said Peter Randall, CEO at SETL. The company raised $39.5 million from angel investors after Britain voted to leave the European Union, the biggest U.K. deal since the referendum, according to trade group Innovate Finance.................


London needs every advantage it can get. It’s no secret cities like Frankfurt and Amsterdam see June’s referendum as an opportunity to cement their own financial hub status. There are also worries that Brexit will cut off London’s access to top-tier talent from the rest of Europe, and that it could lose access to customers in the single European market.

Adding to London’s woes, venture capitalists have been shy to invest in its fintech sector in the months since the referendum. Funding dropped 26 percent to $532 million in the third quarter from a year earlier, according to Innovate Finance. Investors have canceled or delayed funding for at least 30 British startups since the vote.

That’s where the U.K. regulator’s plan comes in. While most regulators are mainly known for shutting down risky ventures or doling out fines, lawyers and entrepreneurs say the FCA is much more likely to try to help an enterprise get off the ground."

Source: Bloomberg