The old saying, “When America sneezes, the world catches a cold,” is a well-worn phrase and it is certainly true that many American policies and political developments have ramifications far beyond the self-styled Land of the Free. The question is how much this may be true for crypto, and developments in the UK may be well worth watching.
Donald Trump’s transformation from first-term crypto sceptic to second-term crypto enthusiast has been made manifest by the establishment of a strategic Bitcoin reserve and legislation to provide more regulation, such as the GENIUS Act, to provide a regulatory basis for stablecoins.
An Opportunity For Businesses
This raises the question of which other countries might undertake similar measures. Companies setting up crypto accounts for business payments will be among those who can benefit from the increasing use of crypto as an alternative to fiat currency, which in turn will be more viable the more seriously governments take it.
In the latter regard, the more regulated crypto is, the safer it should be, as this will provide more protection for consumers, businesses and investors, as well as establishing important trading rules. Furthermore, if more countries take a comprehensive approach, this makes international agreements and regulatory alignment easier to achieve.
British Plans For Regulatory Alignment
It is at this point that the questions of whether the UK will copy the US become especially pertinent. This is not just a matter of shared language and culture, or even the ‘special relationship’, but recognition that there may be a significant economic opportunity involved.
For this very reason, the UK Treasury has confirmed that talks have been taking place on regulatory alignment between the US and UK financial markets, including in the area of digital assets.
This is happening under a UK government that is very different in political outlook to the administration in Washington, which begs the question of whether a government in London that is ideologically much closer to Mr Trump’s might go further.
The answer to that question is undoubtedly yes. The emergence of the right-wing Reform UK party has been a major disruptive force in the British political landscape. With ambitions not only to usurp the Conservatives as the main party of the right in Britain but also to replace the current Labour government, Reform is currently leading national opinion polls.
Farage Pushes Bank Of England Over Crypto
Reform leader Nigel Farage, a friend of Mr Trump and advocate of many similar political ideas, has urged the Bank of England to be more supportive of cryptocurrency. He pressed this point in a meeting with the Bank’s governor Andrew Bailey.
Mr Farage has previously claimed the Bank’s approach to cryptocurrency was “madness”, accusing central bankers of “turning their back on it completely”.
After the meeting, Mr Farage said the response from Mr Bailey had been “encouraging”. However, he added: “I think they’re adopting an overly cautious approach. What he did say was, in that world, that they are looking at it.”
How much influence Mr Farage’s views may have in the short term may be less significant than the impact of any regulatory alignment over crypto agreed by the present government with the US.
What A Reform Government Could Do
However, even though the next UK general election does not have to take place until the summer of 2029, the position of a Reform-led administration is highly significant, given the seriousness with which everyone from political pundits to civil servants is starting to take the party’s prospects of victory.
Were that to happen, it could mean a Reform government implementing pro-crypto measures and making this part of the Bank’s remit, perhaps the biggest change to the role of the central bank since it was given autonomy over monetary policy in 1997.
By 2029, Mr Trump’s second term as president will be over, but even if he is replaced by a Democrat, it is by no means certain that the steps taken by the present administration will be rolled back by its successor, especially any agreements made with a left-leaning British government.
Will Other British Parties Be Pro-Crypto?
That could set the stage for a more pro-crypto British government, and it may be that other UK parties adopt such a stance themselves. Therefore, even if Reform turns out to be a flash in the pan (older Britons may recall the fate of the Liberal-SDP Alliance in the 1980s), there may still be a shift in UK policy towards setting crypto on a firmer footing.
What this could do is more than just create new opportunities that British and American firms could share in, but also encourage other countries to follow suit. This, in turn, may boost the value of cryptoassets further and create further opportunities for businesses to make and receive crypto payments in an increasingly routine fashion.