The United Kingdom welcomed yet another new Prime Minister, and crypto enthusiasts only have one question: What does this mean for our favorite asset class? Rishi Sunak, the former Chancellor of the Exchequer (the UK's equivalent of the US Treasury Secretary), has taken over from Liz Truss after she resigned from the post after 45 days in office. Sunak is seen as a business-friendly politician, and many in the crypto industry are hoping that this will mean good things for digital assets in the UK.
Let’s look at some instances where Sunak has played a role in DeFi regulations.
Recession calls for protecting virtual assets
In the face of an economic crisis, Sunak is in a pressurized spotlight. All eyes are on him to solve the inflation turmoil, especially after Liz Truss’s financial measures backfired leading to her resignation.
However, Sunak is no stranger to crises and coming up with innovative ways to handle tricky situations. During the pandemic when Boris Johnson was PM and Sunak was his chancellor, the present PM came up with the furlough payments and Eat Out to Help Out schemes for providing financial aid to wage earners and restaurants.
Pioneering technological advancements
“We're working to make the UK a global cryptoassets hub. We want to see the businesses of tomorrow, and the jobs they create, here in the UK.”
Rishi Sunak, the then UK’s finance minister, April 2022. Click here to read the tweet.
In April, the UK government led by Sunak on the financial front announced their plan to be a player in the digital tech world. Banks and fintechs across the globe are making waves through digitization and decentralization and the UK cannot afford not to participate if they want to level the competition.
The first step they proposed is a financial market infrastructure sandbox. This is to lay the groundwork and experiment with crypto technology. The next step will require close engagement with the crypto industry to explore how to develop the market further profitably.
Financial Services and Markets Bill
Sunak helped develop the proposed Financial Services and Markets Bill which contains amendments including regulation of digital assets as financial instruments. While parliamentarians are still working to address potential risks, the House of Commons has approved the bill.
Sunak has reportedly asked the Royal Mint to create an NFT collection. However, it will be a long time before the bill passes the upper house of the Parliament and becomes a law. But the bill definitely raises hope for crypto to be recognized as a valid form of payment in the UK.
UK Central bank digital currency
Although Sunak has extended his support for cryptocurrency to enable the industry to thrive, he proceeds with caution. Taking proper regulation measures and working with relevant industry stakeholders are among his plan to advance the future of virtual assets.
Sunak’s crypto standpoint however is centralization. Crypto’s reputation of being high risk has led to encouraging crypto usage as stablecoins in the form of a UK Central Bank digital currency or ‘Britcoin’. So while Sunak is positive about virtual assets, his CBDC approach might not be good news for DeFi advocates.
Summing up
Called a "safe pair of hands" by some, Rishi Sunak has widely been seen as a competent and competent politician supportive of cryptocurrencies. The change in leadership comes at a time when the UK is facing many challenges, including Brexit and the coronavirus pandemic. So Sunak has a lot on his plate.
Even with the centralization of cryptocurrency, digital assets becoming valid in the 5th largest economy in the world is still huge and will be the starting point of more exciting advances. We are looking towards progress in leaps and bounds for DeFi and blockchain technology. Until the Financial Bill gets the final green light by King Charles III, we are bating our breaths to see what else Sunak brings to the crypto table.
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