Mr Smith, whose company is reportedly seeking to raise funds at a $20bn (£15bn) valuation, said he agreed with Mr Hammond’s comments.
He added: “I think there are regulators in Europe that are doing really interesting stuff like Ireland and Germany, they’ve come out with full regulatory frameworks, licences that you can apply for.
“You now have these purpose built frameworks that companies like us can apply and operate under. But you haven’t seen that in the UK.
“As we become a more global company, our footprint grows around the world, and it tends to grow in places where we feel like we can work closely with the regulator. So I think it will probably grow a lot more in Germany than it will in the UK over the next couple of years.”
Blockchain.com, founded in York and named after the blockchain technology that powers Bitcoin, lets users buy, sell and store cryptocurrencies such as Bitcoin. Valued at $5.2bn, its investors include Sir Richard Branson. Mr Smith runs the company from its US headquarters in Miami.
It currently has a “temporary” licence to operate a cryptocurrency exchange in the UK, but Mr Smith said the regulator had dragged its feet on granting it a full licence. “The FCA has been very reluctant to extend that,” he said.
The FCA said it encourages innovation.
A spokesman said: “Through initiatives like the sandbox, where firms have safely tested blockchain-based services, the FCA has demonstrated that high, consistent standards build trust in innovation.
“We are continuing our work registering crypto firms to ensure they are not a conduit for money laundering and recently launched a consultation on how crypto is marketed to consumers. We will continue to work with HM Treasury, who set the scope of crypto regulation in the UK.”
Blockchain.com has been touted as a potential candidate for a float. Mr Smith said the company had no immediate plans to go public but that when it does, the US was the most likely location, despite the Government’s efforts to encourage more financial technology companies to list in London.
Blockchain.com boss Peter Smith on ‘the Wild West’ of NFT trading
Today the world is divided into cryptocurrency millionaires who bought in early, and those who wish they had done.
The total value of all cryptocurrencies in existence stands at around £1.5 trillion, up tenfold in two years even when taking a market slump over the last few months into consideration. Banks, many that spent years dismissing Bitcoin as a fad, are now racing to meet insatiable institutional demand for cryptocurrency investments.
But 11 years ago in a post-financial crisis York, it was a very different world. Three entrepreneurs who were living and working in one flat in northern England were often met with blank stares when they said they were running a crypto company named Blockchain.com.
“It was back before there was any venture capital available for Bitcoin startups,” says chief executive Peter Smith, one of those three. “When you said you were working on a Bitcoin startup, most people thought that you were either a lunatic or unemployed. It wasn’t really seen as a viable economic activity.”
Smith, an American, had been studying economics in London. Like many early cryptocurrency fans, he became attached to the idea after living in different countries and being forced to deal with multiple cryptocurrencies.
He headed north and moved in with Ben Reeves and Nic Cary – fellow Bitcoin enthusiasts he had met online. “The total number of people who wanted to work on crypto at the time was small enough that everyone knew everyone,” he says.
At that time in 2011, Bitcoin – founded by the pseudonymous Satoshi Nakamoto – was only three years old, and one token was worth a dollar. Today it trades at $45,000.
The trio’s company, Blockchain.com, is worth $5.2bn (£3.8bn), making it Britain’s biggest cryptocurrency start-up. Reports suggest an upcoming funding round could take that to $20bn, which would make billionaires of Smith, Reeves and Cary – the company’s majority owners.
Current investors include Sir Richard Branson and Scottish investment giant Baillie Gifford. Smith’s job now includes rubbing shoulders with central bankers: in 2017 he urged the Bank of England’s then-governor Mark Carney to explore issuing a digital currency.