We sat down for an interview with Petr Kozyakov, Mercuryo’s Co-Founder and CEO, and Suzanne Morsfield, Policy Advisor at CryptoUK. 

The interview marks Mercuryo joining  CryptoUK, the self-regulatory trade association for the UK’s digital assets industry.

We sat down for an interview with Petr Kozyakov, Mercuryo’s Co-Founder and CEO, and Suzanne Morsfield, Policy Advisor at CryptoUK. 

The broad ranging discussion covered a variety of topics, including the challenges and opportunities that the digital asset market faces in the UK.

Petr, tell us more about joining CryptoUK. How valuable a contribution do you think Mercuryo will make as part of this partnership?

Petr: The CryptoUK team is a coalition of crypto advocates and educators who focus on helping the general public, government officials, and regulators better understand cryptocurrencies. 

Similarly, Mercuryo is bridging the gap between non-crypto natives and the web3 sector. And seeing as we already serve as a bridge between the web2 and the web3 worlds, Mercuryo is able and willing to leave a footprint in the development of the crypto sector in the UK by providing unique insights and sharing the expertise we’ve gained from operating in the crypto market.

As a major global payment platform working with leading participants and stakeholders across the digital asset space, we have much to give in terms of valuable industry experience. This is particularly true for the aspects of web3 that require a different regulatory approach—one that would be flexible enough not to undermine the technology yet achieve the right outcomes in terms of compliance and consumer protection. 

Suzanne, how is CryptoUK working with its members, particularly those in the field of blockchain payments, to ensure that the UK does not miss the great opportunities represented by blockchain technology?

Suzanne: CryptoUK is the UK’s leading digital assets industry trade body, and is the Crypto and Digital Assets APPG secretariat. We champion the sector’s growth and success, advocating for the industry in the public and private sectors, and the media. We campaign for fair and proportionate policy and regulation on behalf of, and in partnership with our members.

One major way we actively support our members is by working collaboratively wherever we can with like-minded parties. For example, we recently hosted an event at Parliament that was co-sponsored by the Crypto Council for Innovation and supported by the Payments Association and the Digital Pound Foundation. In addressing shared challenges for the sector, we also co-authored a letter with The Payments Association regarding concerns about the de-banking of fintech and crypto asset businesses by UK banks. 

Moreover, our organisation has many working groups led by our members, dedicated to providing comprehensive responses to formal consultations and developments in regulations or policies. We actively engage in consultations and roundtable discussions on critical industry matters, including participation in events such as the HM Treasury Stablecoins Industry Roundtable, Bank of England and HMT Digital Pound Consultation, and FCA Stablecoins Discussion Paper.

Petr, the application of blockchain technology is most prevalent in the financial and payment sectors. How exactly is blockchain transforming these industries? What benefits can blockchain bring to the B2B space? 

Petr: One of the most significant applications of blockchain in finance is the tokenization of both digital and non-digital assets, including stocks, bonds, real estate, and intellectual property. This trend is expected to gain traction in the capital markets in the coming years, enabling greater liquidity, accessibility, and efficiency in asset trading.

Additionally, the growth of stablecoins needs to be mentioned, as it is reshaping cross-border payments and addressing financial inclusion challenges in the developing world. As of May 2024, the total market capitalization of stablecoins has reached $160 billion, up from approximately $130 billion at the start of 2023. This growth highlights the increasing demand for stablecoins as a reliable store of value and medium of exchange, as they offer faster and cheaper alternatives to traditional payment methods, facilitating seamless transactions across borders.

At Mercuryo, we leverage blockchain technology to provide more efficient and accessible financial services suitable for today’s society. Our solutions enable businesses to accept and process payments in crypto and stablecoins, providing a faster and more cost-efficient alternative to traditional payment instruments.

If we are to achieve mass adoption in web3, we need more seamless payment gateway solutions. As a leading provider of such a service, Mercuryo stands at the forefront of this transformation, facilitating crypto transactions for businesses worldwide.

Suzanne, the crypto industry is brimming with innovation, which is, of course, accelerating advances in the technology. Still, it also faces the challenge of increased regulation. How do you see the industry responding to greater regulatory scrutiny, and what challenges and opportunities do you see here? 

Suzanne: The industry’s response to regulatory scrutiny is multifaceted. Firstly, there is an ongoing effort to embrace regulatory certainty that fosters a level playing field between the digital assets industry and other sectors in the UK. This involves advocating for proportional regulations that ensure compliance with existing laws and acknowledge digital asset’s unique characteristics.

Secondly, industry players are actively engaging with regulators through various channels. This includes participating in consultations, roundtables, and sprints to provide detailed insights and feedback on regulatory proposals. The goal is to highlight potential issues and offer practical solutions that address industry concerns while supporting innovation and growth. 

Still, despite the challenges posed by increased regulatory scrutiny, there are also opportunities for the industry to evolve and mature. Clear and consistent regulations can provide a framework for businesses to operate within this sector, fostering trust and confidence among investors and consumers. Achieving this only further enables the overwhelmingly legitimate and innovative participants in the digital assets industry.

Petr, what difficulties and challenges are companies facing when integrating blockchain technology into their businesses? How can companies in the digital asset space help businesses overcome these challenges in 2024? 

Petr: While it may sound somewhat like a cliche, we are still at the very early stages of such integrations. Businesses face many challenges when it comes to adopting blockchain technology, and a lot depends on the particular industry and the needs behind the adoption. 

If we’re talking about the payments sector specifically, then one major roadblock comes from safety concerns, as ensuring the safety of digital assets and sensitive data on blockchain networks is paramount. This is where our expertise comes to the forefront, as Mercuryo’s team delivers best-in-class robust solutions. 

Our solutions can be used through API integration, and we ensure that the requisite KYC verification processes are completed. This means that our clients don’t have to deploy resources to ensure the safety of payment transactions.

Additionally, optimising user experience poses a challenge, as businesses need to provide intuitive interfaces and seamless interactions for users interacting with blockchain-based systems. 

Petr, in your opinion, what are the biggest innovations that we have seen in the digital asset sector within the last year? What are the most interesting trends in 2024? 

Petr: In the past year, one of the most significant innovations in the digital asset sector has been the rise of layer 2 solutions on Ethereum. These networks have become increasingly important, addressing scalability issues and facilitating faster and cheaper transactions. 

As Ethereum strives for mass adoption of web3 products and services, layer 2 solutions will likely only grow in importance. They offer scalable and cost-effective transaction processing and improve the overall user experience.

For instance, Arbitrum and Optimism, two leading layer 2 solutions, have grown substantially, with their collective TVL reaching billions of dollars. This data reflects their increasing adoption and utility.

Furthermore, the approval and launch of Bitcoin ETFs have provided traditional investors with easier access to Bitcoin, driving further adoption and investment, particularly among institutional clients. The positive market sentiment born from this development led to BTC reaching a new all-time high of $73K in March 2024, highlighting the ongoing market confidence.

As for prominent trends, I would say that GameFi and SocialFi are the two sectors that stand out here. GameFi merges blockchain technology with gaming and has gained momentum as players seek to monetize their gaming experiences and digital assets. According to DappRadar, the GameFi sector has captured a 30% market share of the web3 market in Q1 2024. The user bases and in-game economies are expanding rapidly, indicating strong user engagement and investment.

Similarly, SocialFi, which combines social media platforms with decentralized finance, is poised to revolutionize how users interact with financial services and social networks. Platforms like Rally and BitClout are pioneering this space, offering new ways for content creators to monetize their work and engage with their communities. The rise of SocialFi reflects the growing demand for decentralized social networks that offer users greater control and opportunities.

At Mercuryo, we are actively forging partnerships with leading participants to capitalise on these trends.

To wrap things up, Suzanne, how close is the UK to achieving its ambition of becoming the preeminent global blockchain hub, both in terms of technology adoption and regulatory framework?

Suzanne: The UK’s vision hinges on three interconnected factors: the adoption of blockchain technology, the regulatory framework, and the attractiveness of the ecosystem for digital asset firms. These elements form a three-legged stool; their synergy is crucial for achieving global hub status.

If the regulatory framework is not proportionate or crafted to encourage digital asset firms to “open up shop” in the country, this will hinder the realisation of the hub status and the widespread adoption of blockchain technology.

In terms of progress, there are positive signs indicating that the UK is moving in the right direction. The government’s vision and commitment to fostering innovation in the blockchain sector are encouraging. Additionally, regulators are actively engaged in crafting a regulatory framework to provide greater certainty and clarity for industry participants.

Furthermore, as the country’s leading digital assets industry trade body, CryptoUK is well-positioned to support the government’s efforts and collaborate with industry stakeholders. Through initiatives like the Code of Conduct and industry-led input, CryptoUK seeks to promote best practices and contribute to developing a thriving blockchain ecosystem.

There is still work to be done to achieve the hub status, certainly. Collaborative efforts between the government, industry players, and other stakeholders are necessary to address any remaining challenges and ensure that the UK emerges as a global leader in blockchain innovation and adoption. But we are getting there in incremental, but significant steps.