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Rishi Sunak is big on crypto. He\u2019s made that clear. For years, the British prime minister, a multimillionaire former hedge fund manager, has pushed<\/a> for widespread adoption of blockchain technologies as a rocket boost<\/a> for the national economy.\u00a0<\/p>\n But not everyone\u2019s buying it. There are lawmakers within the prime minister\u2019s own Conservative Party who are vocally anti-crypto. With a general election looming on the horizon<\/a>, the window for Sunak\u2019s dream of turning the U.K. into a global digital asset hub is narrowing.<\/p>\n Not least because the main opposition Labour Party led by Keir Starmer \u2014 widely tipped to win by a landslide<\/a> in a vote scheduled for no later than January 2025 \u2014 hasn\u2019t yet outlined where it stands on digital assets. For crypto-skeptic author David Gerard, that lack of engagement spells bad news for the British crypto industry.\u00a0<\/p>\n \u201cLabour has expressed almost no interest in blockchain-related matters, so I suspect the current enthusiasm for blockchain is not lasting past next election,\u201d Gerard said.<\/p>\n But for advocates of the industry, the fact that sections of the public already use digital assets means the discussion is far less cut and dry.\u00a0<\/p>\n Ijeoma Okoli, a digital assets legal and regulatory expert and co-founder of the Digital Economy Institute think tank, said that up to 15% of U.K. adults have at least \u201cdabbled\u201d in crypto assets. Independent regulator the Financial Conduct Authority (FCA), meanwhile, calculates U.K. cryptocurrency ownership at just under 10%<\/a> of the population.<\/p>\n \u201cThat\u2019s a significant part of the voting public,\u201d said Okoli. \u201cYou never have 100% of the people agreeing on anything, do you?\u201d<\/p>\n Because of that, she added, it\u2019s important that the U.K. crypto conversation remains \u201cpolitics agnostic\u201d regardless of who\u2019s in power beyond the election \u2014 if only to ensure that those already engaging with the industry, or might in future, are represented.<\/p>\n When a16z crypto<\/a>, the crypto arm of Andreessen Horowitz, set up the U.S. investment giant\u2019s first international office in London in June, Sunak hailed the move as a testament to the strength and competitiveness of the U.K. business environment. But he also acknowledged there was still work to do for the U.K. to become a genuine digital asset hub.<\/p>\n Sunak\u2019s involvement in directing crypto policy began during his time as finance minister to then Prime Minister Boris Johnson from 2020 to 2022. In April 2021, he convened a task force<\/a> to explore a potential digital pound, a central bank digital currency (CBDC) issued by the Bank of England.\u00a0<\/p>\n A year later, he announced a roadmap<\/a> for widespread adoption of blockchain technologies. That included plans for regulating privately issued stablecoins, development of a non-fungible token (NFT)<\/a> by national currency maker the Royal Mint and a crypto-friendly adjustment plan for the tax system.<\/p>\n But within a few weeks, the crypto industry was on its back. The Terra-Luna<\/a> stablecoin protocol folded in May 2022. The crash set off a chain-reaction of industry implosions and a period of crypto winter that the market is yet to emerge from.\u00a0<\/p>\n Those ruptures in the crypto industry coincided with a months-long period of self-harm by the Conservative Party. Johnson \u2014 accused of covering up ministerial parties at his official residence during a nationwide coronavirus lockdown \u2014 resigned and was replaced by Liz Truss in September.\u00a0<\/p>\n Truss received her marching orders 49 days later after a string of calamitous decisions, including plans for swingeing tax cuts that briefly threatened to derail the economy, and was succeeded<\/a> by Sunak in late October.<\/p>\n In office, Sunak resumed his digital asset push. But the damage was done. In March, with institutional cash flooding out of the crypto industry, his flagship Royal Mint NFT project was declared a dud<\/a>. The project, which suffered from a lack of direction and technological feasibility, was labeled a \u201cgimmick\u201d by Labour\u2019s shadow economic secretary Tulip Siddiq.<\/p>\n \u201cThis out-of-touch government should be focused on the cost of living crisis, not wasting time and taxpayers\u2019 money on an NFT vanity project and promoting dodgy stablecoins,\u201d Siddiq said following the announcement.<\/p>\n Crossed wires<\/strong><\/p>\n Crypto-skeptic David Gerard said the failure was part of a wider lack of understanding of the technology by the Tories (Conservative politicians).<\/p>\n \u201cThe Conservative blockchain enthusiasm is very non-specific. The Tories don\u2019t seem at all clear on what specifically they\u2019re advocating for here,\u201d he said.<\/p>\n He added that in the face of growing public dissatisfaction at persistently high inflation<\/a> \u2014 6.8% in July with food prices up 14.9% year-on-year \u2014 the Conservatives were clinging on to anything that might mask wider policy failings. Of particular note in that regard, Gerard said, was the widespread support among the Conservatives for Brexit.\u00a0<\/p>\n Bloomberg economists report<\/a> that the decision to leave the European Union is costing the U.K. economy \u00a3100 billion a year (US$124 billion) in lost output, fueling the nation\u2019s economic woes.<\/p>\n \u201cThe fundamental problem is that Brexit failed hard for almost everyone except a very few rich \u2018sovereign individuals.\u2019 If the Tories want to keep power, they need to do something that isn\u2019t just rejoining Europe,\u201d Gerard said.\u00a0\u00a0<\/p>\n \u201cSo the Tories have seized upon \u2018blockchain\u2019 \u2014 whatever they think that is \u2014 in the hope this will be the magic they desperately need,\u201d he added.<\/p>\n The problem is exacerbated by Sunak\u2019s inability to get everyone in the party reading from the same hymn sheet.<\/p>\n A Treasury Committee report<\/a> released May 17 found that cryptocurrencies pose \u201csignificant risks\u201d to consumers. The committee, chaired by \u200b\u200bcrypto-skeptic Conservative MP Harriett Baldwin, concluded that the price volatility and risk of loss means cryptocurrencies should be regulated as gambling<\/a>.\u00a0<\/p>\n The headline-grabbing declaration dialed up public scrutiny of crypto at a time when November\u2019s FTX crash<\/a> and the crisis<\/a> at a number of crypto-friendly U.S. banks in early 2023 had the industry under a microscope.\u00a0<\/p>\n Even before the Treasury\u2019s report came out, there was already a large section of the British public that was skeptical about digital assets.\u00a0<\/p>\n Between April 26 and May 18, New York-based blockchain developer Consensys and London-headquartered data analytics firm YouGov conducted an online survey<\/a> of global attitudes to crypto, differentiated by country. It found that 55% of the U.K. population consider the industry too volatile and subject to scams to engage with.\u00a0<\/p>\n Another YouGov poll from last year found that 60%<\/a> of the British public believe cryptocurrencies are not to be trusted.<\/p>\n In that light, just how damaging could the gambling label prove for improving the\u00a0public perception of blockchain technologies and their uses?<\/p>\n \u201cIncredibly damaging,\u201d said Dion Seymour, a former crypto policy lead at HMRC, the U.K\u2019s national tax service. \u201cl was banging my head against the table. It felt like we had gone right back to almost Victorian times in terms of understanding.\u201d<\/p>\n Not only was the Treasury Committee report \u201cout of touch<\/a>\u201d and \u201cnot fully thought-through\u201d \u2014 gambling winnings are untaxed, for one \u2014 the label would also make people think twice about engaging with an industry they may otherwise have found value in, Seymour added.<\/p>\n But it\u2019s not all doom and gloom for blockchain advocates and developers. Resigned to losing the more forthright backing of Sunak\u2019s Conservative government, they still feel accommodations can be made with Keir Starmer\u2019s Labour.<\/p>\n \u201cWe have had a pro-growth, pro-innovation Conservative government. That\u2019s not to say that Labour is not also pro-growth and pro-innovation, but sometimes priorities can be differentiated,\u201d said Teana Baker-Tayler, non-executive director of think tank CryptoUK and a U.K.-based policy lead for stablecoin issuer Circle.<\/p>\n \u201cWe\u2019re still waiting to see what the Labor Party\u2019s mandate will be, and I think that will come closer to the time of the general election,\u201d Taylor-Baker added.<\/p>\n Labour ministers have generally been quick to criticize the \u201cwild west<\/a>\u201d attitudes they said the overly-permissive Conservatives allowed in the U.K. crypto market. The lack of regulation in the space, they argued, led to cryptocurrency heists and other scams dangerous to consumers.\u00a0<\/p>\nHiccoughs<\/strong><\/h2>\n
Put up and make do<\/strong><\/h2>\n