Last Updated on November 1, 2022 by Bitfinsider
The next leader of the United Kingdom, who served as finance minister under previous prime minister Boris Johnson, faces a tough to-do list that includes rectifying the economic disaster caused by his predecessor, Liz Truss. Crypto is not very high on his priority list, but industry insiders express optimism.
“There is a sense of relief among entrepreneurs,” said Christian Faes, co-founder of the internet lending business LendInvest. After the hubris and ineptitude of Liz Truss and [ex-Finance Minister] Kwasi Kwarteng nearly brought the U.K. economy to its knees, there is a sense that Number 10 is now occupied by a rational individual.
“Rishi recognizes the possibilities and potential of cryptocurrencies and wants the United Kingdom to be a leader in this space,” said Faes, who also leads the Fintech Founders network.
Former Goldman Sachs analyst Sunak has stated a favorable stance toward crypto on multiple occasions. In April, as Britain’s finance minister, he presented a bold ambition to make the country a global crypto hub. This includes bringing stablecoins within regulatory restrictions and convincing the Royal Mint, the official U.K. coin manufacturer, to release a nonfungible token.
Sunak stated in June, during a reception hosted by the venture capital firm Index Ventures, that he was “determined” to make the United Kingdom “the jurisdiction of choice for crypto and blockchain technologies.”
But after weeks of political unrest, crypto businesses and investors are unsure of what he would do to help the industry, which is licking its wounds following a brutal few months for digital asset prices and a string of corporate bankruptcies.
Sunak could aim to synchronize the activities of several U.K. regulators to oversee cryptocurrencies, as President Joe Biden has advocated for in the United States.
While the British government has kept the door open for digital currencies, independent regulators have taken a harder stance towards the industry.
In April 2021, Sunak’s finance department and central bank formed a joint team to examine the viability of a token recognized as being equivalent to the British pound. Although it has been nicknamed “Bitcoin,” it is unlikely to resemble bitcoin, which is decentralized and volatile.
Varun Paul, market infrastructure director at crypto software company Fireblocks, told Bitfinsider: “We may now see an acceleration in the work being done on these suggestions; this is something to watch in the coming months.”
The Federal Reserve, the European Central Bank, and other central banks are contemplating the development of their own digital currency. A digital version of the yuan has already been actively tested in a number of provinces, giving China the lead in the CBDC race.
Investors in cryptocurrencies want Sunak to clarify the industry more than anything else. The U.S. government has issued a cryptographic framework. Moreover, the European Union has developed a comprehensive set of regulations governing the industry.
The Financial Services and Markets Bill intends to make the United Kingdom’s financial sector more competitive following Brexit. It is still being debated in parliament, but if passed, it would recognize crypto assets as regulated financial instruments.
Martin Hiesboeck, head of blockchain and crypto research at trading platform Uphold, stated in an emailed response, “With Sunak at the lead, the route to regulatory certainty is likely to be substantially quicker.”
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