The departure of Boris Johnson as U.K. prime minister leaves a big question about the future direction of crypto policy in a country that only recently declared its intention to set itself up as a crypto hub.
For now, the resignation will likely disrupt the government’s legislative agenda, including on issues like stablecoins, and it raises the question of whether the next administration will be as pro-Web 3 as Johnson's administration was.
This week, a drip of resignations, starting with Treasury Chief Rishi Sunak, turned into a torrent that made Johnson’s departure inevitable.
His leaving follows a series of scandals in which Johnson was fined by the police for hosting parties during the COVID-19 lockdown that he himself imposed and most recently concerns he had ignored sexual-harassment allegations in appointing Chris Pincher to the senior post of deputy chief whip.
Johnson’s ruling Conservative Party must now select a new leader. The party members in Parliament will hold a series of votes to get to the final two candidates, who will then face a vote by the broader Conservative Party members.
The winner will then become prime minister and select a new slate of ministers. The last time round, the process took about two months, from Theresa May announcing she was stepping down in May 2019 to the nomination of Johnson as her successor.
As recently as Wednesday, Bank of England Deputy Governor Jon Cunliffe was promising a bill on stablecoins by August. The industry has previously hailed the regulatory clarity expected from the law, but its future now lies in doubt.
Nadhim Zahawi, Sunak’s successor, who was appointed Tuesday as the new head of the Treasury, has plenty on his plate to deal with, including the rising cost of living caused by higher food and energy prices.
While Zahawi can still make the decisions needed to keep the economy running, procedural government guidance says interim ministers shouldn’t bring forward new initiatives with long-term consequences. In any case, with more than 50 resignations in recent days, it’s not clear that there’s enough ministerial manpower to shepherd a bill through.
Sunak’s departure sealed Johnson’s fate, but also improved his own chances of becoming the next prime minister, according to betting markets cited by the Guardian newspaper.
From a crypto perspective, Sunak’s position is both known and broadly positive. In April, he described his “ambition to make the U.K. a global hub for crypto-asset technology” and asked the country’s Royal Mint to issue a non-fungible token (NFT).
There’s no formal slate of candidates yet, and many of those expected to run have made few comments about crypto.
In 2020, Liz Truss, then trade minister and now responsible for foreign affairs, said the U.K. exit from the European Union was an “opportunity to … really lead the world in areas like artificial intelligence and blockchain.”
Penny Mordaunt, another widely tipped candidate, seemed enthused after a meeting with the Texas Blockchain Council in April, suggesting there could be opportunities for the U.K.’s own financial center in London.
Ben Wallace, the defense minister who has topped some recent polls, has most prominently referred to the risk of cryptocurrency being used for money laundering in his previous role as minister for security.
Meanwhile, Matt Hancock, a lawmaker who has championed the cause of crypto by calling for a liberal tax and regulatory regime and who stood for the leadership in 2019, has told the media he won’t be doing so this time.
Crypto, not bitcoin
Others’ public positions are more nuanced, including those of some notable bitcoin skeptics.
Tom Tugendhat, House of Commons foreign affairs committee chairman, was one of the first to throw his hat into the ring for the as-yet-unavailable prime minister post back in January. In previous tweets and parliamentary speeches, he’s said he’s “bullish on ether and not bitcoin,” and called for a Treasury legal framework to support what he’s called a “fundamental rewriting of ownership models.”
Steve Baker, a lawmaker who formerly sat on the House of Commons Treasury Committee and served as Brexit minister, has suggested he might also stand as a candidate. In a 2014 parliamentary statement, he said he welcomed crypto as a way “to move away from state money.”
“Every obstacle to the creation of alternative currencies within ordinary commercial law should be removed,” Baker said, although he added that bitcoin was “imperfect and possibly doomed.”
Ultimately, though, the crypto community is going to be left guessing for a while. Comments made almost a decade ago may offer little insight into a new prime minister’s strategic direction, still less that of his or her finance minister – and the British political class has left few clues to go on.
A report in May by advocacy and research group SEC Newgate UK found that the country’s lawmakers had been “almost silent” on the topic of crypto and blockchain, raising the risk that the U.K. has become a “laggard” in the growing sector.