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Could Rishi Sunak make the UK a global crypto hub?

New leader of Britain's Conservative Party Rishi Sunak waves outside the party's headquarters in London, Britain, October 24, 2022. REUTERS/Henry Nicholls
New leader of Britain's Conservative Party Rishi Sunak outside the party's headquarters in London, Britain, October 24, 2022. Photo: Henry Nicholls/Reuters

Rishi Sunak has been appointed as Britain’s prime minister after Liz Truss resigned last week. Could the UK become a world-class crypto-hub under his premiership? Yahoo Finance asked key crypto-analysts what they think might happen under Sunak's reign.

The appointment of Rishi Sunak as prime minister could be a fresh opportunity to set favourable regulatory conditions to promote the UK as a world-leading crypto-hub.

On Tuesday, bitcoin was unimpressed by the latest appointment in the revolving-doors of UK politics.

Bitcoin (BTC-USD) has side-stepped along the $19k mark for the past week, and ether (ETH-USD), the second-largest cryptocurrency, tip-toed in its footsteps, up only 0.3% in the past seven days to $1,344.

Read more: Crypto live prices

Crypto analysts have identified key areas where the former Chancellor of the Exchequer could boost the UK's standing as a hub for digital assets, distributed ledger technology and cryptocurrencies.

But, before we look into the initiatives that Sunak could implement, let's review the interest he has shown in blockchain-based industries to date.

In April, Sunak elaborated on a plan to make the UK “a global cryptoasset technology hub”, where alongside former Economic Secretary to the Treasury John Glen, he laid out a comprehensive roadmap for UK’s crypto future.

Watch: US Senator: 'Digital assets will be as big as the internet itself' | The Crypto Mile

This included the development of new legislation for a ‘financial market infrastructure sandbox’ that can aid crypto-firms to innovate.

As chancellor he oversaw a Finanical Conduct Authority-led ‘CryptoSprint’ to further encourage the innovation of distributed ledger technology (DLT) within the UK.

Blockchain technology is a key method for creating the secure distributed ledger technology that is driving innovation in finance, information exchange and 'smart' contracts for multiple sectors of the economy.

Sunak, who was also the chief secretary to the Treasury, oversaw an initiative with the Royal Mint to create an exclusive NFT, plus the formation of an engagement group to work more closely with industry.

Earlier this year the Royal Mint stated: "As part of the chancellor of the exchequer’s ambition to make the UK a global hub for crypto-asset technology and investment.

"The Royal Mint has been asked to produce an NFT for Britain, we are delighted to once again lead the way for UK currency."

Under Sunak's fiscal management the UK government also confirmed that it plans to initiate a research programme to explore the feasibility and potential benefits of using DLT for sovereign debt instruments.

Read more: What you need to know about crypto profits and HMRC

This also included exploring ways of increasing the competitiveness of the UK tax system to encourage growth in the cryptoasset market in the UK.

And lastly, there is Sunak's highly promoted 'Britcoin' concept, which is a central bank digital currency (CBDC) project for the Bank of England.

In Oct 2021, when chairing the G7 Finance Minister Meeting in Washinton DC, Sunak launched a set of public policy principles for retail CBDCs.

Key changes that Rishi Sunak could implement to encourage the crypto-industry in the UK

Crypto analysts have identified the key policy changes that Sunak could make to promote the UK as a world-class hub for crypto and digital assets.

Speaking to Yahoo Finance, COO of Cex.io Konstantin Anissimov sees Sunak's relocation to Ten Downing Street as a progressive step-forward for blockchain-based activity within the UK.

He said: "We’ve been hearing about Sunak’s plans to pivot the UK toward becoming a world-class crypto hub since he served under Johnson, but so far much of these efforts have been stuck in the strategy and planning stage of development.

"However, Sunak’s recent win should signal a re-prioritisation of the UK’s commitment to revolutionising its relationship with the digital asset space."

Anissimov added that the UK's Financial Services and Markets Bill currently making its way through the House of Commons, could help codify some of these efforts into law, while laying the groundwork for future regulatory inclusions down the line.

"The success or failure of this legislation has the potential to test the fledgling prime minister’s leadership as this outcome could affect the viability of Sunak's vision for the UK's revitalised role in the crypto space", Anissimov maintains.

LONDON, ENGLAND - OCTOBER 24: New Conservative Party leader and incoming prime minister Rishi Sunak leaves the Conservative Party Headquarters after having been announced as the winner of the Conservative Party leadership contest on October 24, 2022 in London, England. Rishi Sunak was appointed as Conservative leader and the UK's next Prime Minister after he was the only candidate to garner 100-plus votes from Conservative MPs in the contest for the top job. (Photo by Dan Kitwood/Getty Images)
Crypto fans are optimistic about their future, as they believe that the new UK prime minister Rishi Sunak is broadly supportive of their industry. Photo: Dan Kitwood/Getty

Marcus Sotiriou, analyst at GlobalBlock also reinforced the call for the new prime minister to provide regulatory clarity to the cryptospace within the UK.

Sotiriou said: "Rishi Sunak could help to provide more clarity for crypto regulation in the UK if he follows through with his aims from earlier this year.

"Liz Truss’ leadership led to political and economic instability, as the pound (GBP=X) almost reached parity with the dollar shortly after she started her role as prime minister.

"It is believed that Rishi Sunak is significantly more competent when it comes to economic matters, hence potentially leading to less fear in UK markets in the short term."

LONDON, ENGLAND - OCTOBER 25: British Prime Minister Rishi Sunak makes a statement after taking office outside Number 10 in Downing Street on October 25, 2022 in London, England. Rishi Sunak will take office as the UK's 57th Prime Minister today after he was appointed as Conservative leader yesterday. He was the only candidate to garner 100-plus votes from Conservative MPs in the contest for the top job. He said his aim was to unite his party and the country. (Photo by Leon Neal/Getty Images)
Crypto fans are urging Sunak to give them regulatory clarity for the sector. Photo Leon Neal/Getty

Regulatory clarity is needed for the UK's crypto-industry to progress

Konstantin Anissimov explained that it is a confidence booster for the crypto-industry to know they have a potential ally at Ten Downing Street.

However, he added: "But, it remains unclear how these nuances will be addressed given the somewhat narrow scope of the policy frameworks and proposed legislation we’ve had the privilege to view.

"If Sunak is keen on realising his dream of pivoting the UK toward becoming a world-class crypto hub, we must see clarity on what role the private sector will play in this new regulatory landscape.

"Additionally, defining how and to what extent the government plans to step in to protect market participants and institutional stakeholders alike would signal a true sea change for the UK's policy toward crypto."

The Bank of England has researched plans for a CBDC, the so-called 'Britcoin'

Rishi Sunak was one of the early advocates for a Bank of England CBDC, or so-called Britcoin. Could his appointment see the acceleration of the development of this innovation

Anissimov said: "Sunak's recent ascent to prime minister should signal that these, and other crypto related plans, are poised to enjoy renewed focus under his leadership.

"While much remains to be decided regarding the role, function, and legal status of many digital assets, having a crypto believer in such a high office should spell optimism for the industry.

"Even if “Britcoin” is still a ways off, there’s little to suggest that Sunak has deviated from his earlier statements about the viability and value of such a project."

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