Here we are again. Our third Prime Minister in only a year isn’t the most stable of pictures. Liz Truss’ premiership went up in flames before it even had time to get out of the gate, announcing her resignation a mere 45 days in. A whirlwind race to No. 10 began and a few days later Rishi Sunak was announced as the new Prime Minister of the world’s sixth-largest economy.
What went wrong for Truss and her crypto ambitions and, more pressingly, what does Rishi Sunak have in store for the UK and its crypto future?
Out with the Old New and in with the… Newer
45 days in office is nothing. It’s not even a spit in the ocean. So, to give Liz Truss some slack, it wasn’t enough time to really get going with any plans. That being said, it was enough time to trash the pound… In any case, Truss’ plans were daring and ambitious. A low tax, pro-business stance looked to such models as Singapore for inspiration. Enticing businesses for economic growth is a no-brainer for a stagnant economy. After all, once the barriers of overcomplicated bureaucracy and high taxes go down, industries flock to the country. This is where crypto comes in.
We’ve seen empty promises from Boris and wild dreams from Truss, yet these words mean nothing if they all go up in smoke weeks after they were announced. Any potential crypto hub needs an open-minded government, businesses that have their rights secured, stability, and acceptance among the public. Dubai is a prime example of how to do crypto right. Appealing tax regimes, Free Economic Zones, and an already buzzing international hub have arguably made Dubai and the UAE the crypto center of the world.
Crypto Domination: Boom or Bust?
Let’s now turn to Sunak and his crypto plans. Just looking back a few years at Sunak’s views on the industry is a good sign for crypto and the UK’s future. Sunak’s time served under Boris Johnson’s government as Chancellor of the Exchequer saw continual support for crypto. Speaking back in April, Sunak announced, “It’s my ambition to make the UK a global hub for crypto-asset technology, and the measures we’ve outlined today will help to ensure firms can invest, innovate, and scale up in this country.”
Without further ado, let’s take a look at these measures. The government’s plans include:
- securing the UK’s position as a global financial hub;
- bringing stablecoins within regulation, which will allow them to be seen as a recognized form of payment;
- legislation for a “financial market infrastructure sandbox,” which will give companies the tools they need to innovate and maximize their potential within the FinTech and crypto world;
- working with the Royal Mint on an NFT to boost interest and launch government-backed crypto-assets.
In actual fact, the UK has already made leaps and bounds with its crypto legislation by allowing NFTs to be issued as a court summons, a first in the UK and Europe. Funnily enough, it was Sunak who commissioned the Royal Mint to create the UK’s very own NFT. The Royal Mint is a revered institution, so what better place to spur on the UK’s crypto hopes? The images are yet to be revealed and the price is still up for debate. It’s important to remember here that we’re dealing with a commodity and having the opportunity to own the Royal Mint’s first NFT is a price many would be willing to pay… regardless of the number of zeros on the price tag. Some industry members have even suggested offering priceless perks to accompany the price tag. This leads me to my next point…
You Can Take a Horse to Water But You Can’t Make It Drink
As I’ve mentioned, Singapore and Dubai are thrown about in conversation, especially when it comes to crypto. Recently, Singapore tightened its crypto regulations. The country remains open to investments but views crypto-assets as volatile. After being dubbed the No.1 crypto-friendly destination, a string of scandals saw Singapore lose its sparkling reputation. Singapore-registered company terraUSD went bust in May and a few other high-profile disasters, like the Three Arrows Capital collapse in June, saw some investors jumping ship and heading to safe havens like Switzerland and Dubai, despite all the perks Singapore offers.
It’s worth noting that as more countries start regulating crypto, attractive offers will prise investors away from previous top-notch destinations, making stability and openness vital factors. This is where attractiveness starts to wear thin. Incentives and added bonuses are good, however, if you’ve not got the nuts and bolts figured out, you’ll soon find yourself sinking.
So, what can the UK government do to make it an attractive place for crypto?
First and foremost, crypto friendliness. Forward-thinking and an actual plan to make that a reality. Sunak’s intentions to cement the UK’s financial services sector at the forefront of technology include the previously-mentioned infrastructure sandbox for the financial market and working alongside industry experts to ensure the UK keeps its competitive edge. We can safely say that this would most likely take the form of tax incentives, the launch of a CBDC (first expressed by Sunak back in 2021), and regulating stablecoins.
It’s worth underlining the importance of stablecoins in this plan. Long story short, businesses aren’t going to jump to crypto if there’s any kind of risk, especially during these difficult times. Stability is the name of the game and once ready for use, stablecoins will provide the reliability and safety needed, while also paving the way for crypto to be rolled out in the country. Moreover, the Financial Services and Markets Bill, which as of writing has passed its second reading in the House of Commons and is currently at the Committee stage, would give local government the power to regulate crypto, shaping its future and adoption for daily use.
As seen with Dubai, the balance of regulations, tax incentives, and an already blooming international hub works like a dream. On the other hand, Singapore is an example of how things can quickly go downhill should that balance go out of whack. Don’t get me wrong, Singapore is still one of the world’s top crypto destinations, yet the scandals and regulation tightening have seen its crown lose its shine. The UK should therefore take note of what works and what doesn’t, particularly during these tumulous times, as investors are looking for a steady hand and future security. As this is the UK’s third Prime Minister in a year, many investors will be asking themselves twice whether the UK really is the best destination. The saving grace is Sunak and his pro-crypto attitude commanding this ship. However, if he’s unable to get a handle on the current economic crisis, these dreams may simply remain just that — dreams.
