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Key Takeaways
Rishi Sunak has emerged as the next expected Prime Minister of the United Kingdom.
Rishi Sunak appears to hold a positive view of crypto, blockchain, and distributed ledger technologies.
While the path forward is not certain, his appointment could well lead to pro-crypto policy change in the U.K.
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Rishi Sunak’s appointment as the new British Prime Minister could benefit the U.K.’s burgeoning crypto industry.
The U.K. Gets a New PM
Rishi Sunak will become the U.K.’s next Prime Minister.
The news broke Monday after rival candidates Penny Mordaunt and former Prime Minister Boris Johnson dropped out of the Conservative Party leadership election, making Sunak the de facto winner.
Following the resignation of the previous Prime Minister, Liz Truss, on October 20, the ruling Conservative Party started the process of electing a new leader and Prime Minister. Truss, who took over from Boris Johnson on September 5, was pressured to resign after only 44 days in office. Her economic “mini-budget” plans which included substantial tax breaks for top earners, drew heavy criticism from both the general public and members of her own cabinet.
Sunak will inherit the U.K. premiership at a turbulent time. Throughout 2022, rising inflation has put a strain on the global economy. In the U.K., the Consumer Price Index registered a 10.1% year-over-year increase in September, revisiting its July highs and indicating that inflation will likely stay high for longer. Energy supply issues caused by the Russian invasion of Ukraine have only exacerbated the U.K.’s economic woes, resulting in domestic energy bills rising another 80% at the start of October.
How Sunak will deal with the U.K.’s pressing economic issues is still unknown. The new Prime Minister is yet to form a cabinet or present any policy plans to the general public. However, while Sunak’s economic strategy is still under wraps, his appointment may mark a continuation of several pro-crypto policy decisions made during his tenure as Chancellor of the Exchequer between 2020 and 2022.
Sunak’s Crypto Stance
Rishi Sunak appears to hold a positive view of crypto, blockchain, and distributed ledger technologies.
While acting as the Chancellor of the Exchequer in April 2021, Sunak proposed that HM Treasury and the Bank of England put together a task force to explore the creation of a central bank digital currency. CBDCs, as they are more commonly known, are digital currencies issued by a central bank rather than by a commercial bank. They are generally assumed to use blockchain technology to verify transactions between parties, similar to the Bitcoin or Ethereum networks.
The exploration of a CBDC aligns with the Treasury’s aim to help fintech companies scale up and ensure the U.K. remains at the cutting edge of digitalizing finance. To this end, the new task force was also slated to investigate the use of distributed ledger technology for private sector applications.
In April 2022, Sunak doubled his commitment to crypto when he released plans to make the U.K. a global crypto technology hub. At the forefront of these plans was the call to recognize stablecoins as a valid form of payment, a move that could significantly boost the U.K. crypto industry.
The report also highlighted that the “financial market infrastructure sandbox” constructed in 2015 would continue to allow crypto companies in the U.K. to innovate without the fear of running afoul of regulators. Additionally, the Treasury would work with the Royal Mint on producing an NFT and explore ways of enhancing the competitiveness of the U.K. tax system to encourage further crypto development. “It’s my ambition to make the U.K. a global hub for cryptoasset technology, and the measures we’ve outlined today will help to ensure firms can invest, innovate and scale up in this country,” Sunak said.
Under Sunak’s chancellorship, the U.K. government’s pro-crypto posturing continued. HM Treasury confirmed that stablecoin legislation would be part of the U.K.’s new Financial Services and Markets Bill. It’s also worth noting that the U.K. government’s approach to crypto regulation has been very equitable to industry stakeholders. The Treasury has put out multiple “calls for evidence” and invited feedback from the public, such as when it sought views from investors, professionals, and firms engaged in decentralized finance to help draft tax legislation.
When Sunak left his position as Chancellor of the Exchequer ahead of Prime Minister Boris Johnson’s resignation on July 7, it put the U.K.’s pro-crypto approach into question. There was no guarantee that the next government would promote crypto innovation or implement fair regulations. Nadhim Zahawi, the interim Treasury chief following Sunak’s resignation, had previously indicated he favored blockchain technology. However, for Zahawi’s replacement, Kwasi Kwarteng, it was unclear if he would continue Sunak’s pro-crypto commitments.
Now that Sunak is set to return to government—as the Prime Minister, no less—the future of crypto innovation and regulation in the U.K. looks clearer. In his new role, Sunak will likely appoint a Chancellor of the Exchequer who shares his positive views on crypto technology. Still, with Sunak becoming the third U.K. Prime Minister to take office since the last general election in 2019, his future is far from certain. He will have to convince both members of Parliament and the general public he can handle the job to avoid being pressured into calling an election (current polling data indicates that he would likely lose an election to the U.K.’s opposing Labour Party). Although Sunak’s appointment is broadly good news for crypto in the U.K., whether he can maintain his position in the coming months remains to be seen.
Disclosure: At the time of writing, the author of this piece owned ETH, BTC, and several other cryptocurrencies.
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