George Osborne cut the ribbon on the United Kingdom’s first Bitcoin automated teller machine (ATM) in 2013, declaring that ‘if crypto is happening, then we want it to happen here’.
Despite his bullishness 12 years ago, the former UK Chancellor of the Exchequer’s ambitious vision has not come to fruition.
Osborne, who now serves on Coinbase’s advisory council, has admitted that the UK is lagging behind other nations in cryptocurrency adoption.
You can buy a BlackRock Bitcoin ETF in New York, but retail investors in the UK cannot. The eight million Uk citizens who have bought crypto have done so through overseas firms.
The world’s financial capital has already missed the first crypto wave and should be wary of missing the second, which involves stablecoins and tokenisation.
A Missed Opportunity with Stablecoins
Stablecoins are unlike the first wave of digital tokens. Fiat currencies anchor them and allow for lightning-fast, low-cost transfers. Some of them move around the world for a fraction of a cent.
Tokenisation is being used to bring stocks, bonds and real estate onto blockchain, obliterating costs and bureaucracy in the same way Nigel Lawson’s Big Bang reforms did for London in the 1980s.
However, while the United States Congress has passed the Genius Act to encourage the adoption of stablecoins, and other nations regulate the sector, the UK continues to lag behind.
The Bank of England prohibits commercial banks from issuing stablecoins, and recent moves will only make sterling stablecoins less attractive than their dollar-backed counterparts.
Around 99 percent of stablecoins are dollar-based, as America dominates the scene while the UK sits on the sidelines. Osborne’s frustration is understandable.
The Case for Catching Up
Parliamentarians from the cross-party Crypto and Digital Assets APPG agree with Osborne’s assertions. Lord Vaizey and Gurinder Singh Josan MP responded to Osborne, arguing that the UK can still seize a second mover advantage even after missing out on the first wave.
Britain can learn from the mistakes of others to craft a clear competitive framework if it moves quickly. Unfortunately, they face practical and regulatory problems. Licensed crypto firms are not receiving access to banking services, forcing them to operate in a state of limbo.
Only 51 firms managed to secure approval from the Financial Conduct Authority. These obstacles send a message that the UK is not yet ready to partake in this new future of finance.
For a country whose financial reputation has always been characterised by openness and agility, that is a dangerous message to send.
The UK’s influential standing globally could encourage other countries to take a similar stance towards crypto, which is a potentially massive mistake.
Why Kuwait Should Pay Attention?
The UK is not the only country that has been hesitant towards crypto. Several nations around the world continue to debate whether to adopt or reject digital tokens, including Kuwait.
Kuwait’s Ministry of Finance has refused to recognise cryptocurrencies for official transactions. Its central bank banned banks from trading in them and warned customers about the risks.
To further deter its people from crypto, Kuwait cracked down on home-based mining operations that the country blamed for their power shortages.
Unfortunately, this type of rigidity creates several problems. It forces active crypto users underground, making oversight more difficult. For example, many Kuwaiti citizens have turned to crypto as a financial option for participating in online gaming, which is also frowned upon.
The best online casinos in Kuwait, such as those listed on comparison website كازينو الكويت typically offer Arab players a decentralised finance option.
Failing to relax their stance on crypto leaves Kuwait on the outskirts of global finance, while the rest of the world gravitates towards a new financial order.
A Tale of Two Futures
The differences between Kuwait and the UK’s stance are fascinating. The UK is stalling and over-regulating, while Kuwait is viciously banning and punishing. Both risk irrelevance in the financial future.
Countries that have adopted crypto responsibly are attracting investment, generating new jobs and driving financial innovation. For instance, the United Arab Emirates has become a recognised centre for crypto conferences, welcoming companies that Kuwait previously pushed away due to its policies.
Even after all its political wrangling, the US is also now leading the way in stablecoin infrastructure. Meanwhile, Kuwait is at a disadvantage. The Gulf nation has been focused on oil for decades, and crypto represents a new diversification pathway that it desperately needs.
Rejecting crypto means missing out on the opportunity to develop expertise, attract talent and future-proof its economy. The UK’s danger is more reputational. London has always been ahead of the curve financially, thriving on openness.
However, Osborne believes that the UK risks becoming a financial museum, proud of its past but absent from the future. Ignoring his warning could be catastrophic for the UK.
