There’s a one-in-three chance that Britain’s next prime minister will be a strong supporter of bitcoin and cryptocurrency, following news that former finance minister Rishi Sunak has secured his place in the final showdown to replace Boris Johnson.
Betting site oddschecker.com gives Sunak a 15 out of 8 chances of getting the highest job in British politics, reflecting an implied probability of 35%. That compares with odds of 11/21 (67%) for rival Liz Truss, the outgoing Foreign Secretary.
Sunak has, thus far, avoided mentioning cryptocurrency during his two-week campaign, instead focusing on a self-proclaimed (albeit highly contested) record of tax responsibility.
It remains a fact, however, that he is by far the highest ranking politician in British history to voice his support for cryptocurrency during his tenure.
“It is my ambition to make the UK a global hub for crypto-asset technology,” Sunak reportedly said in an official Treasury statement on April 4e.
“We want to see the businesses of tomorrow – and the jobs they create – here in the UK, and by regulating effectively we can give them the confidence they need to think and invest for the long term.”
His ally in that short-lived campaign was then-Treasury Economic Secretary John Glen, who explained the duo’s penchant for cryptocurrencies in a speech at the Innovate Finance Global Summit during Fintech Week 2022.
In the end, the pair didn’t have much luck fleshing out their view of the UK crypto industry; both resigned from Johnson’s government on July 6epaving the way for Sunak to launch his long-awaited leadership bid.
Even so, their initial focus on regulating stablecoins has already paid off in the Financial Services and Markets Bill, a bill that is currently at second reading in the House of Commons. This bill makes provisions for stablecoins such as USDT and USDC – dubbed “digital settlement assets” – to be used as legitimate and fully regulated payment methods.
Getting started with stablecoins and NFTs
Dollar-pegged stablecoins use blockchain encryption (a way to make data immutable) and distributed ledger technology (DLT, a decentralized way to share data) to provide faster and more secure financial settlements than stablecoins. traditional payment channels. The benefits of these technologies are widely recognized. But because they involve the use of digital tokens as a proxy for the underlying currencies, they are only as trustworthy as the companies that issue these tokens.
The recent failure of UST algorithmic stablecoin — a protocol that used programming code (rather than physical cash reserves) to defend the value of its tokens — underscored the need for regulation if this corner of the cryptosphere is to gain mainstream acceptance.
Sunak also seems to like non-fungible tokens (NFTs), after asking the Royal Mint, the treasury currency maker, to start issue these digital assets on behalf of the government.
NFTs use the same blockchain and DLT technology as stablecoins, but leverage it to mint non-fungible – or non-interchangeable – tokens that can be kept and traded as unique collectibles.
Last year, meanwhile, Sunak played down speculation that he was planning to launch a central bank digital currency (CBDC) called Britcoin. CBDCs are being hailed by some as the future of government-issued currency: fully digital versions of traditional fiat currencies that can be paid for directly by central banks into consumers’ pockets. However, they are treated with suspicion by many crypto enthusiasts because they do not need to exist on any blockchain or DLT protocol.
Sunak has, to date, avoided making public comments about bitcoin — the largest, most valuable, and most decentralized cryptocurrency. This is not a surprise: its fundamental objective is to give citizens an alternative to money issued by the government.
However, whether to trust crypto-friendly Switzerland, the creation of a legal framework for stablecoins and NFTs will inevitably stimulate wider adoption of blockchain and DLT technologies in the UK economy. And excluding bitcoin would simply not be compatible with Sunak’s stated goal of incentivizing major players in the global crypto ecosystem – exchanges, digital asset banks, stablecoin issuers, etc. – to settle in the United Kingdom.
With or without his contribution, it is clear that UK regulators are already resigned to this new crypto frontier.
The Financial Conduct Authority (FCA), the UK’s financial regulator, recently created a new department focusing solely on digital asset compliance – having spent years trying to steer the Brits away from what they described as a blitz scam.
A not-so-democratic path to office
Unfortunately for Sunak – whose popularity was (and, to a lesser extent, probably still is) significantly higher than that of Truss – the general public will have no say in who succeeds Johnson, who resigns after a series of scandals spoiled his post as Prime Minister. .
Indeed, the British parliamentary electoral system only allows citizens to vote for local political representatives, while leaving their affiliated parties free to choose a figurehead.
Members of the ruling Conservative Party will therefore vote in September, after several weeks of lobbying by the two hopefuls.
And while bitcoin is unlikely to get a nod from either candidate, Sunak and Truss have put economic policy at the heart of their campaigns – mindful of the cost of living crisis. in Britain, which has seen annual inflation hit a 40-year high. 9.4%. Truss sought to blame Sunak for this crisis, with aides criticizing the former finance minister’s failure to shut down the Bank of Englandthe UK’s central bank, intensified money printing during the pandemic.
Sunak rejects that accusation, arguing that Truss’ plan to cut taxes will only exacerbate inflation while increasing the national debt.
Whoever wins the top job will have to convince the general public they deserve the role by the end of 2024 – the latest date the Tories can call a general election in the current legislature.