Cryptocurrency means different things to different people. For some it is a form of technology and financial information and a growth driver, for others a source of confusion, and for many a source of distrust and scepticism.
For the UK government, the former seems to be the case. Prime Minister Rishi Sunak is banking on tech, including blockchain and crypto, to secure much needed growth for Britain. Achieving a ‘Digital Britain’ is on the Conservative Party’s agenda, Lisa Cameron MP remarked at the Pay360 conference.
Government on course for a Digital Britain?
Cameron is confident that the UK will secure and maintain a global position as a leading crypto hub. However, as noted by some of the other speakers who shared the stage with the Chair of the All-Party Parliamentary Group (APPG) on Cryptocurrency and Digital Assets in London last month, the country still has some hurdles to clear.
In the context of some widely publicised controversies, notably the collapse of FTX which resulted in the exchange’s founder Sam Barkman-Fried recently handed a lengthy prison sentence, crypto has been viewed by many as ‘the Wild West’, Cameron noted.
“We need to look at regulation,” she said. “And actually the industry was very on board with that. Crypto UK also helped with the secretariat, and where there’s clarity, in terms of regulatory framework follows investment, follows innovation, follows startups.
“Therefore we thought that it was very important that the UK have a leadership role. To summarise, the Prime Minister is someone who really gets digital technology. We want to see the cryptocurrency hub developing in the UK, a digital Britain more widely I would say.”
Getting this Digital Britain vision over the line is not an easy task however. Cameron noted that there is still scepticism among many MPs, driven by controversies such as those mentioned above, as well as governmental barriers.
Licensing is a key area the MP believes must be addressed as well as the ever important topic of consumer protection. In the view of Julian Buhagiar, General Partner at Yolo Group and Yolo Investments, more proactivity is needed in government.
“The biggest thing right now is that anybody under the age of 18 is already using crypto. They are trading freely, whether they are using CSGO skins or loot boxes.”
He added that the government needs to “move more proactively, and take a view on what countries like South Korea are doing for instance – they are one of the more advanced states, even Estonia. There’s a lot of very important things happening there”.
“Right now I see a big disconnect between what the head of state is saying and what the institutions are trying to do,” he concluded.
Too much talk?
So what is the regulatory standpoint on this? Representing the Payments Systems Regulator (PSR), Nick Davey, a Payment Specialist for the organisation, appeared more reserved than his counterpart in parliament, Cameron.
Crypto’s status as an investment tool is one of the biggest talking points around the digital currency. However, Davey asserted that this does not ‘lend itself to payments’, a viewpoint shared by the European Central Bank (ECB).
The payments potential of cryptocurrency lies heavily in stablecoins, which are pegged to national currencies. Whilst some big names in payments such as PayPal and Ripple both have their own stablecoins, Davey doesn’t believe that the assets have ‘taken off yet’.
“In the UK there isn’t stablecoin, there is one in the Channel islands which I think is relatively small, so we’re in that stage where people are talking about things,” he said.
When people talk about crypto’s use case for societal benefits, they mostly talk about payments, Davey observed. This conversation often comes down to talk of efficiency, gains, and competition with other payment systems.
He continued: “In the UK, one of the issues is that things are generally free to the public, so actually competing in contests is quite tricky. So then it’s either efficiency or something that you’re giving the customer that they don’t get with other traditional payments systems.”
There is a saying that all publicity is good publicity, and cryptocurrency has certainly become more and more of a talking point over recent years. Buhagiar asserted that “crypto will be successful when people stop talking about it” – i.e. when it becomes so normalised that it is a fact of day-to-day life and day-to-day payments.
This is ultimately a generational thing, however. Whilst Buhagiar believes that ‘everyone under 18’ is using crypto in some way, it will take a considerable amount of time for this generation to become the main demographic of consumers.
The government has its work cut out when it comes to achieving its digital vision, it seems, if some of the observations made by the Pay360 panel are anything to go by. This could be complicated by the general election due to take place in the UK this year, although in a separate interview Cameron remained confident.
Addressing the audience at the ExCel Centre in East London, the MP emphasised the need for a ‘cross government approach’ to digital assets. This would include not just the Treasury, but education, schools and universities, healthcare – “everywhere the technology and digital innovation is touching,” she said.
