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Change in Prime Minister Does Not Mean a Change in the UK’s Attitude to Crypto and Fintech

After just 44 days of a controversy filled tenure, Liz Truss resigned as the UK’s prime minister, paving the way for Rishi Sunak to take over. While a lot of Truss’ plans have been reverted or changed, many members of the public have been left wondering how the fintech and crypto industry will fare under new leadership.

Firstly, it is important to establish what Truss’ views on crypto and fintech are and were. Just three days after her narrow win to assume Boris Johnson‘s role, Truss reaffirmed the UK’s crypto pledge to be a global hub.

When the Financial Services and Markets Bill saw its second reading in Parliament, with Truss at the helm, Richard Fuller, the economic secretary to the treasury, said the government wanted the UK to be the “dominant global hub for crypto technologies”.

According to Business Cloud, he went on to say: “As crypto technologies grow in significance, the UK government are seeking ways to achieve global competitive advantage for the United Kingdom. We want to become 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 revenues, create a wave of groundbreaking new products and services, and bridge the current position of UK financial services into a new era.”

Fuller continued: “The UK can either be a spectator 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 so will build on the strengths of our thriving fintech sector, creating new jobs, developing groundbreaking new products and services.”

Will Sunak’s appointment shake things up?

Truss’ government was clearly in favour of making changes to better the UK fintech market – but will this attitude be carried on by Sunak? In short, we can assume yes, as Sunak acted in a way which 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 (that was discussed above by Truss in parliament), which, if passed into law, could give local regulators broad power over the crypto industry – starting with bringing asset-pegged crypto like stablecoins into the scope of payments regulations.

At the time of writing, the Bill is still very much in its nascent stages, as it currently sits in its committee stage, and must have a third reading before any further decision is made to send it to the House of Lords for approval.

Additionally, the country’s coin producer, the Royal Mint, was tasked with creating a non-fungible token (NFT) collection while Sunak was chancellor, though this is yet to come to fruition.

Industry response

Sunak has become prime minister at a very difficult time, but regardless, the fintech industry seems to generally be supportive of him, as we reached out to hear responses to his appointment:

Lars Seier Christensen, chairman of Concordium and founder of Saxo Bank, the Danish investment bank, said: “As the youngest PM to take office in the UK in over 200 years, Rishi Sunak is already an anomaly.

“What could ensure he goes down in history, however, is he chooses to tackle the recession his country is facing and the fragile economic environment that the last PM only managed to worsen. My guess is that one way he could do this is by finishing what he started as FM and Chancellor of the Exchequer: making the UK a global crypto hub.

“From proposing a British CBDC, to ordering the Royal Mint to create a government-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’s shown time and again that he’s willing to put his lawmaking where his mouth is, so to speak, and it will be exciting to see how he continues to do so in the coming months.

“Only time will tell, but I believe we should give Sunak a chance: most of what I’ve seen of him so far, I’ve felt positively about, and that starts with his stance on crypto. Perhaps a breath of fresh, young, air, is just what Downing Street needs.”

Martin Cheek, managing director of SmartSearch, the AML and cybersecurity organisation, takes a wider view, commenting: “From AI, to quantum computing, to crypto, those on the bleeding edge of these technologies may be feeling optimistic regarding the appointment of Rishi Sunak as prime minister. Key to his aim of financial success for the nation, a healthy UK technology sector has always been high on Sunak’s political agenda.

“Despite delusional statements in some quarters, there is no doubt that the UK technology sector needs a huge shot to the arm. And a single-minded tech-friendly leader in politics is the best hope it has.

“Just one example: Sunak’s knowledge of finance markets will surely boost the chances of fintech soaring high in the UK over the next 10 years. There is no longer the chance of Britain being at the top table of world financial conversations without a world-class fintech industry.

“While more seductive tech categories such as semiconductor and quantum computing, will garner most press, Sunak’s goals – should he achieve them – could create fertile ground for all tech businesses to flourish. The more British tech companies feel confident in the UK tech sphere, and the talent within, the more it will gain ground in China and the US.”

“Rishi needs to invest in AI and automation to limit cyber threats on all UK businesses, among myriad other benefits.

“There are 21 fintech unicorns in the UK as of 2022, but a dearth of unicorns that focus 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 thinks the technology sector should be modelled. Not only that, it seems that he understands how a successful technology sector leads to adventure, optimism, and more forward-thinking people that are willing to take risks. All these things can greatly boost economies.

“But whatever political party or leader is in place, we cannot just be excellent at fintech, but in a much broader range of technologies – and that innovative frameworks for businesses will lead to great success.”

Kevin Murcko, founder and CEO of Coinmetro, a 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 spoken previously about their potential to streamline interbank processes, but as good as it is to hear, we should not jump to the conclusion that he is a died in the wool cryptocurrency advocate; at least not yet.

“His comments have so far been squarely focused on Central Bank Digital Currencies (CBDCs), rather than the decentralised approach favoured by most of the crypto community, and it is important 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 CBDCs, because many don’t. He also appears to appreciate the role such technologies can play in safeguarding and futureproofing 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 cryptoasset sector was one of four key components of that vision. I hope that this leads to a seat at the table for representatives of the industry, 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 blunt obstacles and misguided regulation; we should cheer anyone that appears willing to lean in.

Pavel Matveev, CEO of the UK based, FCA regulated crypto payments firm Wirex said:  “Rishi Sunak has always been vocal about his pro-crypto stance, particularly CBDCs.

“In July this year he was pushing ahead with a new law that will pave the way for everyday crypto payments, despite the BoE having fears about the stability of the technology. Back in April, Sunak laid out his ambition that he wants Britain to be a ‘global hub’ for crypto and the technology, and that stablecoins should be accepted as a form of payment. In order to do so, this means that he would likely encourage investment and the 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 closer at the regulatory side of things, Marcus Sotiriou, analyst at the publicly 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 maker B2C2, Blockchain.com and wallet firm Wirex.

“Rishi Sunak could help to provide more clarity for crypto regulation in the UK if he follows through with his aims from earlier this year. Liz Truss’ leadership led to political and economic instability, as the pound almost reached 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, hence potentially leading to less fear in UK markets in the short term. Sunak has an extremely difficult few months ahead though, with significant economic problems for the UK and the pound.”

Author

  • Francis is a journalist and our lead LatAm correspondent, with a BA in Classical Civilization, he has a specialist interest in North and South America.

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