Change in Prime Minister does not mean a change in the UK’s attitude towards crypto and fintech
After only 44 days of a period filled with controversy, Liz Truss resigned as Prime Minister of Great Britain, paving the way for Rishi Sunak taking over. While many of Truss’ plans have been reversed or changed, many members of the public have wondered how the fintech and crypto industry will fare under new leadership.
Firstly, it is important to establish what Truss’ view on crypto and fintech is and was. Just three days after her narrow victory to assume Boris Johnsonhis role, Truss reaffirmed the UK’s crypto promise of being a global hub.
When the Financial Services and Markets Bill saw its second reading in Parliament, with Truss at the helm, Richard Fullerthe Chancellor of the Exchequer, said the Government wanted the UK to be the “dominant global hub for crypto technologies”.
In accordance Business Cloudhe went on to say: “As crypto technologies grow in importance, the UK Government is seeking ways to achieve global competitive advantage for the UK. We want to be the country of choice for those looking to create, innovate and build in the crypto space.
“By making this country a hospitable place for crypto-technologies, we can attract investment, generate new jobs, benefit from tax revenue, create a wave of cutting-edge new products and services, and bridge the current position of UK financial services into in a new era.”
Fuller continued: “The UK can either be a bystander as this technology transforms aspects of life, or we can become the best place in the world to start and scale crypto technologies.
“We want the UK to be the dominant global hub for crypto technologies and will therefore build on the strengths of our thriving fintech sector, create new jobs, develop ground-breaking new products and services.”
Will Sunak’s appointment shake things up?
The Truss government was clear to make changes to improve the UK fintech market – but will this attitude be continued by Sunak? In short, we can assume yes, as Sunak acted in a way that suggested he supported the development of digital currencies while serving as Chancellor of the Exchequer.
While chancellor, he helped usher in the Financial Services and Markets Bill (discussed above by Truss in Parliament), which, if passed into law, could give local regulators broad powers over the crypto industry – and starts by bringing asset-linked crypto such as stablecoins into the scope of payment regulations.
At the time of writing, the bill is still in its nascent stages, as it is currently in committee stage, and must have a third reading before a further decision is made to send it to the House of Lords for approval.
In addition, the country’s coin producer, the Royal Mintwas tasked with creating a pool of non-fungible tokens (NFTs) while Sunak was chancellor, although this has yet to come to fruition.
Industry response
Sunak has become prime minister at a very difficult time, but regardless, the fintech industry seems generally supportive of him when we reached out to hear responses to his appointment:
Lars Victory Christensenchairman of the board i Concordium and founder of Saxo Bankthe Danish investment bank, said: “As the youngest Prime Minister to take office in Britain in over 200 years, Rishi Sunak is already an anomaly.
“However, what may ensure he goes down in history is that he chooses to tackle the recession his country is facing and the fragile economic environment that the last Prime Minister only managed to exacerbate. My guess is that one way he could do this is by completing what he started as FM and Chancellor of the Exchequer: making the UK a global crypto hub.
“From proposing a UK CBDC, to ordering the Royal Mint to create a state-backed NFT, and even pushing through legislation – the Financial Services and Markets Bill – aimed at regulating crypto in the UK, Sunak is not just a crypto enthusiast. Instead, he has shown time and time again that he is willing to put the law where his mouth is, so to speak, and it will be interesting to see how he continues to do so in the coming months.
“Only time will tell, but I think we should give Sunak a chance: most of what I’ve seen of him so far, I’ve felt positive about, and that starts with his attitude towards crypto. Maybe a fresh, young breath is just what Downing Street needs.”
Martin Cheekmanaging director i SmartSearchthe AML and cyber security organisation, takes a broader view, commenting: “From AI, to quantum computing, to crypto, those at the forefront of these technologies can feel optimistic about the appointment of Rishi Sunak as Prime Minister. Key to his goal of economic success for the nation, a healthy UK tech sector has always been high on Sunak’s political agenda.
“Despite delusions from some quarters, there is no doubt that the UK tech sector needs a big shot in the arm. And a purposefully tech-friendly political leader is its best hope.
“Just one example: Sunak’s knowledge of financial markets will surely increase the chances that fintech will skyrocket in the UK over the next 10 years. There is no longer a chance that the UK will be at the top of the world’s financial conversations without a fintech industry world class.
“While more seductive technology categories such as semiconductors and quantum computing will get the most press, Sunak’s goals – if he achieves them – could create fertile ground for all tech companies to flourish. The more UK tech companies feel confident in the UK tech sphere, and the talent within, the more it will gain ground in China and the United States.”
“Rishi must invest in AI and automation to limit cyber threats to all UK businesses, among countless other benefits.
“There are 21 fintech unicorns in the UK as of 2022, but a lack of unicorns focusing on automation or AI to the same extent as competitors in the US and China.
“Sunak’s time in California has left a lasting impression on how he believes the technology sector should be modelled. Not only that, he seems to understand how a successful tech sector leads to adventure, optimism and more forward-looking people willing to take risks. All these things can increase the economy significantly.
“But whatever political party or leader is in place, we can not only be good at fintech, but in a much wider range of technologies – and that innovative framework for businesses will lead to great success.”
Kevin Murckofounder and CEO of Coinmetroa crypto exchange, was more cautious about what this meant for the UK crypto industry, saying: “The UK now has a Prime Minister with a refreshingly open mind to digital currencies, who has previously spoken of their potential to streamline interbank processes, but as good as that sounds, we shouldn’t jump to the conclusion that he’s a dead-in-the-wool cryptocurrency spokesman; at least not yet.
“His comments so far have been entirely focused on central bank digital currencies (CBDCs), rather than the decentralized approach favored by most of the crypto community, and it is important that we do not confuse the two, they are not the same.
“The good news is that Mr. Sunak knows what crypto is and he understands the difference between Bitcoin, Ethereum and CBDC, because many people don’t. He also seems to appreciate the role such technologies can play in safeguarding and future-proofing London’s dominant position in the financial markets.
“In his Mansion House speech in July 2021, the then Chancellor set out a plan for the UK to remain at the forefront of financial technology and innovation, and the crypto-asset sector was one of four key components of this vision. I hope this leads to a seat at the table for industry representatives, and that with greater education about the untapped potential in this space, we will see a more inclusive and competitive environment for innovators.
“Furrowed brows and quizzical looks result in obtuse obstructions and faulty regulation; we should cheer anyone who appears to be leaning in.“
Pavel MatveevCEO of the UK-based, FCA-regulated crypto payments firm Wirex so: “Rishi Sunak has always been vocal about his pro-crypto stance, especially CBDCs.
“In July this year, he pushed through a new law that would pave the way for daily crypto payments, despite the BoE having fears about the stability of the technology. Back in April, Sunak set out his ambition that he wants the UK to be a ” global hub” for crypto and the technology, and that stablecoins should be accepted as a form of payment. To do so, this means that he is likely to encourage investment and growth of businesses related to the field.
“We are optimistic that we can achieve this in the UK – and look forward to seeing what the government can do for the crypto sector.”
Looking more closely at the regulatory side of things, Marcus Sotiriou, analyst at the listed digital asset broker, GlobalBlock said: “There has been a clear lack of regulatory clarity in the UK regarding digital assets, which has led many firms to seek licenses elsewhere, including crypto market makers B2C2, Blockchain.com and the wallet company Wirex.
“Rishi Sunak could help bring more clarity to crypto regulation in the UK if he follows through on his goals from earlier this year. Liz Truss’s leadership led to political and economic instability, with the pound almost hitting parity with the dollar shortly after she started her role as Prime Minister.
“It is believed that Rishi Sunak is significantly more competent when it comes to economic matters and therefore may cause less fear in UK markets in the short term. However, Sunak has some extremely difficult months ahead, with significant economic problems for the UK and the pound.” »
Francis Bignell
