- Former UK chancellor and current Coinbase advisor, George Osborne, believes the UK has missed the first wave of crypto and now risks missing the second if it doesn’t urgently pass pro-stablecoin legislation.
- Writing in the Financial Times, Osborne argued that the UK is falling behind more pro-crypto jurisdictions like Singapore, Hong Kong, the US and even the EU and risks financial irrelevance in a future global economy dominated by digital assets.
Former UK chancellor and current advisor to Coinbase, George Osborne, said the UK has missed the boat on the “first generation” of crypto and risks becoming financially irrelevant if it doesn’t urgently implement pro-stablecoin legislation.
In an op-ed published in the Financial Times on August 4, the former conservative MP argued that successive UK chancellors (excluding himself of course) failed to see the potential for cryptocurrency. While they sat on their hands, other more forward looking jurisdictions, such as Hong Kong, Singapore and Abu Dhabi, seized the opportunity crypto presented, he wrote.
“Far from being an early adopter, we have allowed ourselves to be left behind,” Osborne said.
The UK has already missed the first generation of crypto. A giant window of opportunity for Britain existed while US authorities remained crypto sceptics. That window has now closed.
Osborne pointed to laws and regulations, such as limiting access to crypto ETFs and blocking bank transfers to crypto exchanges, that have actively discouraged adoption of crypto in the UK. Many similar regulations also exist here in Australia.
“This consumer ‘protection’ has ‘protected’ Britons from the best performing financial asset of the past decade,” the UK’s ex-chancellor snarked.
Osborne fears the UK will continue this trend and fail to capitalise on the opportunity presented by stablecoins — which he sees as crypto’s second wave.
While the UK has remained politically inert on stablecoin legislation, other jurisdictions like the EU and the US have joined the first movers to enact stablecoin legislation. It’s a situation that Osborne believes puts the UK at risk of becoming irrelevant.
“The EU, hardly an upstart, has legislated for crypto. Meanwhile, the US Congress just passed the Genius Act to make America the centre of the stablecoin revolution. And Britain? We’re still deliberating,” Osborne said.
The chancellor says she’ll ‘drive forward’ on stablecoins, whatever that means, while the Bank of England’s governor remains unconvinced that commercial banks should issue them. This hesitation risks irrelevance.
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The UK has now started on the path towards stablecoin legislation, having issued consultation papers in May of this year, but Osborne wrote that what he’s seen so far hasn’t been encouraging.
“Major banks like JPMorgan will issue stablecoins regardless of the Bank of England’s stance,” he said, adding that “the proposed rule requiring sterling stablecoins to be backed only by central bank reserves guarantees that they won’t be used.”
Osborne believes the sterling-backed, UK-issued stablecoins, as imagined by the current government, won’t be able to compete with the US dollar-back stables already dominating the market. That’s partly because the dollar-backed stablecoins can be backed by a broader range of assets, but also because they’ll be cheaper to use and potentially pay a yield.
In the US, a broader range of high-quality liquid assets is allowed for tokens pegged to the dollar. For sterling stablecoins, you’ll pay a fee; for dollar stablecoins, there are minimal transaction costs and you may earn a return. No prizes for guessing which will dominate.
George Osborne, former UK chancellor Osborne wrote that despite crypto’s early ambitions to replace the US dollar, the emergence of stablecoins has instead seen the primacy of the US dollar as a global reserve currency increase. According to Osborne, the UK continuing on its current trajectory “ensures the pound won’t even play a supporting role” in a stablecoin-dominated future.
“Ministers should act to set the framework of law, as Congress has,” Osborne argued, warning, “on crypto and stablecoins, as on too many other things, the hard truth is this: we’re being completely left behind. It’s time to catch up.”
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