15th July 2024 > > UK.

tl;dr

UK politics as they relate to cryptos.

Market Snap

Market Wrap

In the last six trading days over $1bn has flowed into spot BTC ETFs.

We are now one month away from the next quarterly deadline for the filing of form 13-F, which you will recall details the investments made by individual institutional investment managers on behalf of their clients. These returns will give us a good handle on whether the flows into and out of spot BTC ETFs are driven by real demand for BTC as an investment product, or are driven by the perceived arbitrage of the basis trade, otherwise known as cash-and-carry. We could see some big price moves in either direction as the 13-Fs start to be released in the next couple of weeks.

Curious Cryptos’ Commentary – UK

Unlike in the US, the recent elections in the UK brooked no mention of cryptos.

Whilst in power, the Conservative Party promised much to most people, delivered very little (with some notable exceptions) to anyone, put obstacles in the way of most of the means of increasing productivity, and signally failed to reduce the stranglehold of pointless over-regulation, necessitating the highest tax burden since the Second World War. Oh, and let’s not forget flippantly casting aside the basic freedoms and liberties that have been developing for over 800 years since the signing by King John of the Magna Carta in 1215.

Unsurprisingly, this self-evidently destructive approach to being in government was applied equally to the subject of cryptos.

So, we should all be relieved at the changing of the guard, and a bright new future for the crypto industry in the UK.

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Hold your horses, that might be a touch too rosy a perspective.

Tulip Siddiq, MP for Hampstead and Kilburn with an insurmountable majority of close to two-thirds of the local voters, has been appointed by Sir Keir Starmer as Economic Secretary to the Treasury and City Minister. This post gives her primary jurisdiction over the development of crypto legislation and regulation in the UK, so what she thinks does matter.

There are some bland quotes from her, with which one cannot disagree:

“… comprehensive, all-of-government framework to address the emerging risks and opportunities posed by crypto assets.”

“A Labour government would be serious about attracting fintech companies to the UK and safely harnessing the progressive potential of crypto technology”.

And many more, but they are just too boring to copy and paste, let alone read.

To be honest, there is little difference between these public pronouncements and those of her (Conservative) predecessor Bim Afolami. And he did us no favours.

Her only contentious comment that I have found is this:

“But it’s time to reject the arguments of the libertarian right …”

Is she saying the libertarians are only on the right, or that they are the only ones who are right? Or possibly both? And if so, she appears to be defining herself against being a libertarian? Answers, as always, on a postcard to CC Towers.

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What we do know is that on January 31st 2024, a foretaste of Labour’s plans and ambitions (https://labour.org.uk/updates/stories/financing-growth-labours-plan-for-financial-services/) stated:

“5. Embrace innovation and fintech as the future of financial services by becoming a global standard-setter for the use of AI in FS, delivering the next phase of Open Banking, defining a roadmap for Open Finance, embracing securities tokenisation and a central bank digital currency, and establishing a regulatory sandbox for financial products to reach underserved communities.”

Let’s break that down:

“… global standard-setter for the use of AI in FS” – now come on, who’s been at the mid-morning sherry? Our recent history in the regulatory sphere, particularly in finance, suggests rather the opposite outcome. I will be very pleasantly surprised to see that change.

“… delivering the next phase of Open Banking” – I thought that was the job of the banks, but maybe the renationalisation plans about to be unveiled go further than just the railways, the water companies, and swathes of the energy industry.  Which would make sense, as public ownership of the means of production is the political philosophy to which Sir Keir Starmer pledges his allegiance, which is a perfectly legitimate though, some will argue, an ultimately flawed political belief.

“… defining a roadmap for Open Finance” – ditto.

“… embracing securities tokenisation” – now we are talking. Hopefully to Larry Fink, CEO of BlackRock, who can tell us how to “embrace” the next biggest financial revolution.

“… embracing securities tokenisation and a central bank digital currency” – oh dear. I do not have to remind anyone of the dangers inherent to CBDCs, but confusing that flawed concept with securities tokenisation suggests a keen lack of knowledge and understanding of the crypto revolution. Might as well simply put the phone down on Larry Fink when he calls, because this initiative is going nowhere.

“… establishing a regulatory sandbox for financial products to reach underserved communities” – oh yes, it is called allowing BTC to exist unhampered and unimpeded by unnecessary regulation. See my comments above about being a “global standard-bearer”.

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I hope I am wrong, but it seems likely that the new Labour government will be as obstructive and as difficult to the crypto industry as the last Conservative government. Which is a shame, because in the absence of any productive reforms, we really will need those tax-dollars that are already accruing to other nations.