It is one of the worst-performing economies in the Group of Seven. Its living standards have fallen since the financial crisis, and its l...

The UK Is Sending Mixed Messages About Being a Crypto Hub



It is one of the worst-performing economies in the Group of Seven. Its living standards have fallen since the financial crisis, and its leading position in the economy looks increasingly uncertain.


Could Web3 be a growth sector for the UK? The current prime minister thought so in the past. Earlier this year, then finance minister Rishi Sunak said he wanted the UK to become a “global center for cryptoasset technology.”


With a background in finance and top degrees from Oxford and Stanford, young Sunak is full of talent and ambition. With deep pockets and tech billionaire in-laws, he also has a tech bro aura about him. While quieter than Twitter's Elon Musk, it's also less bombastic.


However, Sunak’s crypto ambitions are not necessarily at odds with British politics. The country is already a TradFi hub. Earlier this year, London was again named the world's leading global financial centre. If you think DeFi and cryptocurrencies can improve or co-exist with old-school money, then pursuing the goal of making the UK a crypto hub makes perfect sense.


"We want to see tomorrow's businesses in the UK - and the jobs they create - and with effective regulation we can give them the confidence to think long-term and invest. This is where we ensure the UK financial services industry stays ahead of technology and innovation part of the plan at the forefront," Sunak said in April.


Britain is heading in a different direction


Not everyone is on the same page. Not least the myriad of UK regulators.


Promoting crypto-based services and products in the UK is notoriously difficult. The Advertising Standards Authority (ASA) imposes significant restrictions on any advertising activity.


Earlier this year, there were two similar Crypto.com advertising bans. In one campaign, the company urged customers to "purchase bitcoin with a credit card now." In this case, the ASA ruled that it was "misleading" and "took advantage of consumers' inexperience or gullibility."


This week, the ASA issued a ruling prohibiting advertising on Facebook for Crypto.com NFTs. reason? It "failed to address the risks of investing in NFTs" and "did not clearly state that fees would be charged." What Crypto.com denounced was the use of the word “transaction,” from which the ASA concluded that an NFT (in this case) is an investment product, but did not delve into it. Therefore, the extra part is subject to advertising rules. Source: The Age of the Unbanked


You could very well argue that volatile assets like cryptocurrencies and NFTs need stricter rules. (This is an argument the author agrees with, by the way.) However, NFTs are not regulated by the Financial Conduct Authority (FCA), so their interpretation is largely in the hands of other regulators. In this case, ASA. This brings us to another problem.


As we recently reported, the FCA’s new chairman has some very strong views on the value of crypto assets. Ashley Adler called the industry "willfully evasive" and complicit in a massive money laundering operation. If he takes over early next year, we might get a clearer picture of things like NFTs and crypto tokens. However, his interpretation of key laws is unlikely to have a positive impact on the industry.


Rishi Sunak may scale back his ambitions


Despite earlier optimism, the pro-cryptocurrency UK prime minister is unlikely to stick to his grand ambitions. First, his party trails by 22 points in the polls. The opposition Labor Party, out of government for 12 years, is on 47 percent after recently gaining its highest poll lead over Sunak's Conservatives since 1997. That boded badly, considering Labor won a historic landslide later that year. To put it in simple terms; things don't look so bad for the British Prime Minister who has been in office for more than two decades.


The word for today is prudence. When Sunak outlined his plans in April, we were at the tail end of a cryptocurrency bull market. The industry has yet to see the Celcius, Terra/Luna and FTX scandals. We're on a high and it's kind of crazy to get into crypto, especially for an ambitious, forward-thinking finance minister. Sunak is now prime minister and a lot has changed since then. Source: finder.com


To make matters worse, cryptocurrencies are unlikely to get amicable hearings when Labor is in power. In September's parliamentary debate, Labor spokeswoman Abena Oppong-Asare, speaking for many, said she was asking "whether encryption has any future".


There is also little political interest in adopting cryptocurrencies. In February, a survey found that around half of Brits would not use the technology. That number may have dropped since the rolling scandal in 2022.


It’s not all bad for UK cryptocurrencies


However, there are bright spots on the horizon. Sir Jon Cunliffe, deputy governor of the Bank of England, said he believed "the UK has a real advantage in technology". However, he stopped short of a full endorsement of the industry. Criticize so-called shitcoins, mainly for speculation. "Crypto assets with nothing behind them ... I don't think there will be sustained financial activity around it."


There are also crypto advocates in parliament. Scottish National Party MP Lisa Cameron is an example. In an interview with London's Financial News in September, she said that while she was "not an evangelist ... I realized over time that there was an opportunity in terms of innovation and job creation. You can't put your head in the sand and hope it passes. .”


Cameron is also chair of the All Party Parliamentary Group on Cryptocurrencies and Digital Assets. A voluntary association looking at how government interacts with and legislates in the sector. The far-reaching UK Financial Services and Markets Bill (FSMB) is expected to pass next spring. The law is expected to give regulators significant powers over the crypto industry. Its final form will give observers a good idea of ​​whether the UK is becoming a cryptocurrency hub or a snub.