Joining scores of citizens who are upset over Brexit progress is Europe’s fintech companies. The industry gathered at the Paris Fintech forum and raised concerns about the long winding Brexit conundrum. Several companies of the industry said that they were seeking banking licenses ahead of a Brexit decision.
“Unfortunately no one knows how hard Brexit will be when it comes to banks licenses. One of the options is we need bank license quite soon, so we have a team working on that,” said Maximilian Tayenthal, the CFO of N26, a digital bank considered as one of Europe’s largest fintech startups, according to a CNBC report.
The existing EU rules permit British financial companies with a domestic banking license to operate anywhere in EU. However, if UK exits EU the non-UK companies may have to get new licenses. Also, companies which have licenses from the UK will have to halt services in EU if there is a harsh Brexit. Therefore, the fintech companies are actively seeking domestic banking licenses to function across the territories under EU even if Brexit happens.
Notably, cryptocurrency companies are actively seeking trading licenses in Europe. Revolut, a cryptocurrency company, has obtained a European banking license to serve across the continent. The number of cryptocurrency companies setting up shop in Europe is increasing as it houses some of the most pro-crypto countries in the world including Luxembourg and Malta.
The European Central Bank [ECB], the financial watchdog for EU, warned that UK based companies set up in EU cannot run their business after Brexit. “The ECB and national supervisors, therefore, expect banks to continue to prepare for all possible contingencies, including a no-deal scenario leading to a hard Brexit with no transition,” according to ECB’s website.
A no-deal Brexit might be likely as Theresa May’s proposal still hangs. Since most of May’s Conservative party members oppose her Brexit deal with EU, May winning the necessary parliamentary votes for her proposal is uncertain.
Image via Shutterstock