Silicon Valley venture capital firm Andreessen Horowitz is planning to open its first international office in London, citing the welcoming climate for crypto companies created by UK Prime Minister Rishi Sunak’s government and local regulators as conducive to the decision.
The new office — set to open later this year — will be established by the firm’s $7.6 billion cryptocurrency investment arm, a16z crypto, and led by Sriram Krishnan, one of the firm’s general partners, the company, which is based in Menlo Park, California, said.
The move by one of crypto’s most influential backers comes as US regulators continue to crack down on the beleaguered digital asset sector, prompting companies and investors to expand or establish their base abroad. The US Securities and Exchange Commission sued both Binance Holdings Ltd. and Coinbase Global Inc. earlier this month for allegedly breaking securities rules. Coinbase — in which Andreessen was an early investor — had previously announced plans to set up an international trading platform in Bermuda.
Andreessen, also known as a16z, said that it had led a $43 million investment round in UK-based blockchain AI project Gensyn and that it plans to locate its accelerator program for crypto companies in the British capital next year.
“We have been in discussion with UK leaders for quite some time,” Chris Dixon, a16z crypto founder and managing partner, said in an interview. “We are generally bullish on the UK as an emerging tech power,” he added, noting that the country was “ahead of the curve” on crypto regulation and policymakers had taken a “nuanced approach to blockchain and web3”. Web3 is the moniker given to companies and technologies looking to develop a new distributed version of the internet based on blockchain.
In sharp contrast to the US, authorities in other jurisdictions around the world, including the UK, France, Dubai and Hong Kong, have taken a more accommodative approach and are vying to attract more crypto businesses, by passing or planning dedicated rules to govern the new asset class.
Crypto Hub
Andreessen’s decision to set up shop in London marks a notable win for Sunak’s government and its stated goal of making the UK a global crypto hub. It comes after several large companies including Circle and Binance chose Paris as their main European bases instead. French President Emmanuel Macron and his government have been intensely pursuing companies in the sector.
Read More: Macron’s ‘Startup Nation’ Becomes a Haven for Battered Crypto
While Sunak first laid out his ambitions over a year ago, when he was Chancellor of the Exchequer, the country has been slower to adopt new rules than France and the European Union, which passed a new crypto regime in April. Crypto companies in the UK have lamented they have been struggling with a host of issues including lack of regulatory clarity, slow licensing, and poor access to banking services.
Read More: Sunak’s UK Crypto Ambitions Are Undermined by Reluctant Banks
“While there’s still work to do, I’m determined to unlock opportunities for this technology and turn the UK into the world’s web3 centre,” Sunak said in the statement announcing Andreessen’s plan.
The UK Treasury proposed in February to bring crypto companies under existing financial services rules, including requirements on corporate governance, combating market abuse and token listing standards.
Regulatory Approval
“Approaching and embracing the UK is embracing a new thoughtful regulatory regime that is coming online,” Brian Quintenz, head of policy for a16z crypto, said in an interview.
Andreessen will apply for the necessary regulatory permissions in the UK and said a base in the country will help it work closely with local universities to support development of blockchain technologies and inclusion of the topic in curricula.
The VC’s accelerator program, called Crypto Startup School, offers funding and mentorship to young companies in the space and was held in California this year with 26 participating firms. By locating its next program in London in spring 2024, the firm says it aims to attract entrepreneurs to build more web3 startups in the UK.
Dixon noted that the firm would remain “heavily invested in the US” and committed to working with local policymakers and regulators to push for more regulatory clarity. “We are long-term optimistic that the US will get it right,” Dixon said in the interview. “The thing that we really want is just very clear rules.”
--With assistance from Emily Nicolle.
