WEBVTT - London Is Losing The Crypto Race 0:00:02.800 --> 0:00:06.920 Mr Miller, Hey, what's up, so Matt. We've got this 0:00:06.960 --> 0:00:09.320 podcast this week on crypto and the UK. And I 0:00:09.360 --> 0:00:11.520 hinted that there's an anchor out there with loads of 0:00:11.520 --> 0:00:14.560 money in crypto, but no idea what their password is. 0:00:15.000 --> 0:00:17.680 Can I tell the world it's you? Sure? I mean, 0:00:18.239 --> 0:00:21.239 I'm not sure it's loads of money, but how much 0:00:21.680 --> 0:00:23.760 I have no idea to be honest with you. So 0:00:23.840 --> 0:00:27.280 I bought a few bitcoin to do my reporting in 0:00:27.280 --> 0:00:30.880 two thousand thirteen, and at the end of my session 0:00:30.960 --> 0:00:33.239 I kind of forgot about even the fact that I 0:00:33.280 --> 0:00:35.680 had bitcoin in the wallet, but also of course I 0:00:35.760 --> 0:00:38.919 forgot the passwords. But you know, it doesn't bother me 0:00:38.960 --> 0:00:46.559 as much as it bothers my wife, Francie Laqui in 0:00:46.600 --> 0:00:49.320 the London studio and I am David Merritt's also in 0:00:49.360 --> 0:00:51.159 the London studio. I don't know why I hesitated with 0:00:51.159 --> 0:00:54.720 my name might be said again, am I friends? And 0:00:54.760 --> 0:00:57.520 this is in the City, Bloomberg's podcast that connects you 0:00:57.600 --> 0:00:59.440 to the stories at the heart of the City of London. 0:01:00.080 --> 0:01:03.960 Week we are focusing on crypto. It's the new asset 0:01:03.960 --> 0:01:06.760 class and everyone's lives inclueing. My taxi driver last night 0:01:06.920 --> 0:01:09.280 asking me whether he should invest. And as we take 0:01:09.360 --> 0:01:12.360 this the price of bitcoin is hovering around twenty thousand 0:01:12.440 --> 0:01:15.760 dollars after a pretty volatile weekend of trading. Some people 0:01:15.880 --> 0:01:18.840 making money, maybe more people losing it. And as we 0:01:18.880 --> 0:01:21.759 have just heard from Bloombergs Varrio Matt Miller, you lose 0:01:21.800 --> 0:01:24.560 it all, just be lose your password. It's undeniably a 0:01:24.600 --> 0:01:27.160 part of the financial landscape and the questions we're exploring 0:01:27.200 --> 0:01:29.960 this week how the UK currently views crypto, but also 0:01:29.959 --> 0:01:32.319 how crypto companies currently view the UK as a place 0:01:32.360 --> 0:01:34.160 to do business. So we're going to hear from Philip 0:01:34.200 --> 0:01:36.960 Hammond is a senior adviser to Koppler dot Co. There 0:01:36.959 --> 0:01:40.920 are London based crypto custodian and trading services provider, and 0:01:41.000 --> 0:01:43.759 of course, less we forget he was Chancellor of the Exchequer. 0:01:44.000 --> 0:01:46.440 Now to really sell you on how cryptocurrencies have really 0:01:46.520 --> 0:01:49.520 grained themselves in our current culture, will bring the story 0:01:49.600 --> 0:01:53.400 crypto trading goes to rehab. Oh yes, first, for a 0:01:53.400 --> 0:01:57.520 bit of background, our London based crypto blogger Emily Nicole 0:01:57.640 --> 0:02:02.440 joins us and let's stop with this question. How do 0:02:02.480 --> 0:02:05.960 you gauge where the UK is now? As a crypto destination. 0:02:06.640 --> 0:02:11.120 Is Britain falling behind when it comes to cryptocurrencies. There's 0:02:11.160 --> 0:02:14.120 definitely a sense of that by companies, at least on 0:02:14.160 --> 0:02:18.839 their part, because the UK's regulation of crypto was very 0:02:18.919 --> 0:02:21.720 hands off for several years, and that's not really the 0:02:21.720 --> 0:02:24.760 fault of anybody in particular. The FCA was very clear 0:02:24.800 --> 0:02:26.400 that it was kind of doing as much as it 0:02:26.440 --> 0:02:29.520 could within its own mandate in terms of making sure 0:02:29.560 --> 0:02:32.560 that crypto asset companies abided by money laundering rules, but 0:02:32.639 --> 0:02:35.639 otherwise there wasn't really much that they could do, and 0:02:35.840 --> 0:02:38.560 because of that, crypto companies haven't necessarily been given the 0:02:38.600 --> 0:02:41.840 guidelines they needed to flourish in the UK. So emily 0:02:41.880 --> 0:02:44.160 to understand how we got to this point, it's worth 0:02:44.240 --> 0:02:46.800 unpacking the history of crypto regulation here, and maybe a 0:02:46.800 --> 0:02:50.160 place to start would be the Financial Conduct Authority's decision 0:02:50.240 --> 0:02:53.760 to say we cannot regulate crypto and that was back 0:02:53.840 --> 0:02:57.000 in Was this a game changer? I think it was 0:02:57.040 --> 0:02:59.360 definitely a stance on the FCS part. They wanted to 0:02:59.400 --> 0:03:01.680 make it clear that they could only do so much 0:03:01.720 --> 0:03:03.880 as in their power, and very little is in their 0:03:03.919 --> 0:03:06.239 power to regulate this space. So we've got the f 0:03:06.320 --> 0:03:10.200 c A saying they have no mandate in and in 0:03:10.320 --> 0:03:15.600 ten they come out and ban crypto derivatives for retail investors. 0:03:15.639 --> 0:03:18.880 So what's the significance of them taking that start? In 0:03:19.000 --> 0:03:22.000 terms of crypto derivatives, it's one place where the FSA 0:03:22.120 --> 0:03:23.560 had a reach where it could say, you know what, 0:03:23.639 --> 0:03:25.639 that is something that we already look at. That's something 0:03:25.680 --> 0:03:29.280 we already have powers to handle in the derivative space. 0:03:29.639 --> 0:03:32.920 And in terms of crypto investing, back then, yes, you 0:03:32.919 --> 0:03:35.520 could buy a bitcoin and that bitcoin could be volatile 0:03:35.560 --> 0:03:37.240 and your the price of your investment could go up 0:03:37.320 --> 0:03:40.320 or down. But if you're looking at crypto derivatives, retail 0:03:40.360 --> 0:03:43.360 investors could go on exchanges and buy bitcoin with twenty 0:03:43.360 --> 0:03:46.440 times leverage and wipe themselves out almost instantly if something 0:03:46.800 --> 0:03:49.440 went wrong. And that was the consumer harm they were 0:03:49.440 --> 0:03:51.200 seeking to limit, and it was the part of the 0:03:51.240 --> 0:03:53.240 industry where they felt like they had the powers to 0:03:53.240 --> 0:03:55.600 be able to put those constraints in place, and was 0:03:55.640 --> 0:03:59.640 a wider impact to that move. The far reaching implications 0:03:59.640 --> 0:04:02.480 of that, however, today is that even though that ban 0:04:02.600 --> 0:04:05.760 only applied to retail investors, clearing houses and exchanges in 0:04:05.800 --> 0:04:08.240 the UK have not been willing to list crypto exchange 0:04:08.240 --> 0:04:12.640 traded products for institutional investors either. So Europe has really 0:04:13.240 --> 0:04:16.279 run far and away with that market. It's been offering 0:04:16.320 --> 0:04:19.760 crypto ATPs and on bosses like Switzerland and Germany and 0:04:19.800 --> 0:04:23.360 in Paris for many years. It's a very established market 0:04:23.400 --> 0:04:25.240 over there, it's one of the most established in the world. 0:04:25.560 --> 0:04:27.760 And the UK has had real, no real insight into 0:04:27.760 --> 0:04:30.000 that at all because of this band that happened. And 0:04:30.040 --> 0:04:33.279 then was this a change of attitude for the in 0:04:33.360 --> 0:04:34.840 terms of you know, whether or not that is a 0:04:35.279 --> 0:04:37.440 u turn from from the FCO, or if they're you know, 0:04:37.520 --> 0:04:41.080 changing their sentiment. It's still very common that if you 0:04:41.120 --> 0:04:42.960 look at any f c A speech over the last 0:04:43.000 --> 0:04:46.120 two years, they will say Crypto is something that is 0:04:46.160 --> 0:04:48.840 quite fraudulent. Crypto is something where if you invest anything, 0:04:48.880 --> 0:04:50.640 you should be prepared to lose all of your money 0:04:51.000 --> 0:04:53.320 and we don't have any protections in place to keep 0:04:53.360 --> 0:04:56.120 you safe. So whether or not you know there is 0:04:56.160 --> 0:04:59.279 any movement there or if they'd be changing that anytime soon, 0:04:59.800 --> 0:05:02.840 from a regular truerspective, I'd say no. The government, however, 0:05:02.960 --> 0:05:04.920 is a totally different ballgame. Well, this is I wanted 0:05:04.960 --> 0:05:07.359 to explore a little bit the mixed messaging we're getting 0:05:07.360 --> 0:05:10.360 from the regulators and from the government, and so just 0:05:10.400 --> 0:05:12.200 to kind of set that up a little bit. So 0:05:12.279 --> 0:05:14.680 the Treasury came out a few months ago and said 0:05:14.920 --> 0:05:16.960 we want the UK to be a global crypto hub. 0:05:17.200 --> 0:05:18.960 And if there is one message I want you to 0:05:19.040 --> 0:05:22.480 leave here today with, it's that the UK is open 0:05:22.600 --> 0:05:27.680 for business, open for crypto businesses. If crypto technologies are 0:05:27.680 --> 0:05:30.039 going to be a big part of the future, then 0:05:30.120 --> 0:05:33.919 we the UK want to be in and in on 0:05:34.000 --> 0:05:37.520 the ground floor. They'd obviously seen some of the reporting 0:05:37.560 --> 0:05:39.560 around how bad things might have been going for crypto 0:05:39.600 --> 0:05:42.159 companies here in the last few years, and they're keen 0:05:42.240 --> 0:05:44.120 to change that because the UK is supposed to be 0:05:44.200 --> 0:05:46.640 a financial leader, it's supposed to be a technology leader, 0:05:47.040 --> 0:05:48.839 and if crypto is not part of that, well that 0:05:48.839 --> 0:05:51.800 doesn't look very good for them. But it's such a 0:05:51.880 --> 0:05:55.960 different sentiment and a different voice coming from the government 0:05:55.960 --> 0:05:57.800 as it is from the Bank of England and the SCA, 0:05:57.880 --> 0:06:00.600 who are still very cautious. At the fc A, it's 0:06:00.640 --> 0:06:03.240 still very much you know, there's this sector is right 0:06:03.320 --> 0:06:06.719 with fraud. We can't protect consumers we need to way 0:06:06.800 --> 0:06:08.440 more than we can at the moment, and we don't 0:06:08.440 --> 0:06:10.479 have the mandate to do so. And what about the 0:06:10.480 --> 0:06:12.800 Bank of England as the other voice in the mix, because, 0:06:12.880 --> 0:06:15.760 as you mentioned, the government and specifically the Economic Secretary 0:06:15.800 --> 0:06:19.040 to the Treasury John Glenn is saying London is open 0:06:19.120 --> 0:06:21.599 to crypto business, but then the Bank of England Governor 0:06:21.640 --> 0:06:24.719 Andrew Bailey is less convinced. If you want to invest 0:06:24.760 --> 0:06:27.000 in and be prepared to lose all your money, that 0:06:27.000 --> 0:06:29.360 would be my serious warning. If I thought there was 0:06:29.400 --> 0:06:31.000 evidence that people saying, you know what, I'm going to 0:06:31.080 --> 0:06:35.600 put my pension into bitcoin, I would be very concerned. 0:06:35.880 --> 0:06:37.880 So it seems the Bank of England is just not 0:06:38.080 --> 0:06:41.040 as on board. If you ask the Bank of England, 0:06:41.400 --> 0:06:44.200 they're mainly focused on the technology side of things. They're 0:06:44.200 --> 0:06:47.800 looking at essential bank digital currency and you know, very 0:06:47.960 --> 0:06:51.240 very slowly, very cautiously assessing whether that's something the UK 0:06:51.360 --> 0:06:53.840 wants to be involved in. They've predicted that even if 0:06:53.880 --> 0:06:56.200 we do decide to go for a digital sterling, it's 0:06:56.200 --> 0:06:58.440 not going to happen until the second half of this decade. 0:06:59.040 --> 0:07:01.600 I mean, it feels like the UK is really behind 0:07:01.640 --> 0:07:03.840 the curve on this. Are the regulators worried about a 0:07:03.920 --> 0:07:07.400 reputational damage. I think they're definitely worried, and I think 0:07:07.400 --> 0:07:09.440 it's a little bit of like our hands are tied 0:07:09.600 --> 0:07:12.000 and we need to find something that can help us 0:07:12.120 --> 0:07:14.679 change that. If crypto companies are to kind of feel 0:07:14.680 --> 0:07:18.600 comfortable basing themselves anywhere, the key things that you would 0:07:18.640 --> 0:07:22.200 need in place to do that public support from the 0:07:22.280 --> 0:07:24.960 government and the regulations that are on that are coming 0:07:25.080 --> 0:07:26.960 down the line, because you can't expect to be in 0:07:27.000 --> 0:07:29.040 place at the moment, or at least ones that you 0:07:29.080 --> 0:07:31.960 feel like you could operate safely within that you can 0:07:32.000 --> 0:07:35.840 feel comfortable hiring hundreds of people and basing your technology here. 0:07:36.280 --> 0:07:38.640 And while the UK has a great reputation of supporting 0:07:38.640 --> 0:07:40.880 its companies in terms of funding and in terms of 0:07:41.160 --> 0:07:44.640 access to the right people because of its its history 0:07:44.640 --> 0:07:48.360 with the technology industry, for crypto it is almost the opposite, 0:07:48.680 --> 0:07:51.360 and there is definitely an element of catching up to do. 0:07:56.600 --> 0:07:58.960 Bloomberg Crypto Reporter and the Nicole they are giving us 0:07:58.960 --> 0:08:03.040 a brief history on the UK's relationship with crypto regulation. Now. 0:08:03.040 --> 0:08:04.920 We also thought Dave that it would be good to 0:08:04.920 --> 0:08:06.720 get the take of someone with skin in the game, 0:08:06.920 --> 0:08:09.480 as they say, and some insight into the inner workings 0:08:09.480 --> 0:08:12.120 of government. So we spoke with former Child of the 0:08:12.120 --> 0:08:15.880 Exchequer Philip Hammond. He is now a senior advisor to 0:08:16.000 --> 0:08:19.640 Copper dot Co. There're a London blaced crypto custodian and 0:08:19.800 --> 0:08:22.720 a trading services provider. How has it been leaving government. 0:08:23.280 --> 0:08:26.040 It's been a mixed emotion, obviously, going through the whole 0:08:26.080 --> 0:08:29.760 COVID period, watching that unfold from the outside and watching 0:08:29.760 --> 0:08:33.360 the huge challenges that colleagues who remained in government had 0:08:33.400 --> 0:08:37.920 to deal with. And the big thing about being outside 0:08:37.960 --> 0:08:40.280 the government having been in it is that you know 0:08:40.360 --> 0:08:44.600 what you don't know, so there are non unknowns to 0:08:44.600 --> 0:08:48.120 to use Donald Rumsfeld's terminology, you know the kind of 0:08:48.160 --> 0:08:51.600 information that they would have been seeing, but you don't 0:08:51.600 --> 0:08:53.920 have access to it. So you would have liked to 0:08:53.920 --> 0:08:56.680 be in in government. When there's something big to deal 0:08:56.720 --> 0:08:59.120 with for your country, do you say, oh, you know, 0:08:59.280 --> 0:09:00.960 thank god it's not me dealing with it, or do 0:09:00.960 --> 0:09:03.559 you actually miss being part of the action. So one 0:09:03.600 --> 0:09:06.920 of the accusations often leveled at me in government was 0:09:07.000 --> 0:09:10.360 that I was too managerial and not political enough, And 0:09:10.800 --> 0:09:14.319 actually I think that may very well be a fair criticism, 0:09:14.559 --> 0:09:18.920 but I think during the COVID crisis, managerial skills were 0:09:18.960 --> 0:09:22.640 what was required, and yeah, it would have been great 0:09:22.679 --> 0:09:24.760 to have been there and been able to contribute, but 0:09:25.120 --> 0:09:27.480 it was not to be. How did you choose what 0:09:27.520 --> 0:09:31.400 you were interested in post government? Yeah, and I've I've 0:09:31.440 --> 0:09:34.720 collected a number of roles, many of them in and 0:09:34.760 --> 0:09:40.000 around financial services and particularly fintech businesses, because that was 0:09:40.000 --> 0:09:44.000 always an area of interest to me. And strategically, I 0:09:44.040 --> 0:09:49.320 think that one of the really crucial questions that will 0:09:49.360 --> 0:09:53.559 determine the future prosperity of the UK is how successful 0:09:53.600 --> 0:09:59.000 we are in reshaping our financial services sector to continue 0:09:59.040 --> 0:10:04.120 to succeed and to lead even outside the European Union. Obviously, 0:10:04.679 --> 0:10:06.840 there will be things we can't do as a non 0:10:07.000 --> 0:10:09.440 member of the European Union. We won't have access as 0:10:09.480 --> 0:10:14.679 of right to European markets in the future. But historically 0:10:14.760 --> 0:10:20.520 we've been very agile in embracing new technologies, in in 0:10:20.600 --> 0:10:24.480 using our regulators in an intelligent way to gain gain 0:10:24.520 --> 0:10:26.600 a march over our competitors, and that's what we have 0:10:26.640 --> 0:10:28.600 to do again. But historically, so where are we not 0:10:28.640 --> 0:10:30.839 doing it now? You don't think that we're doing in 0:10:30.920 --> 0:10:37.520 our right in particularly in the area of digital digital 0:10:37.520 --> 0:10:41.160 asset trading. I feel that the UK has has missed 0:10:41.160 --> 0:10:43.880 a trick. It isn't too late for us to catch 0:10:43.960 --> 0:10:46.720 up and recover that ground. But I was saying that 0:10:47.040 --> 0:10:50.480 six nine months ago, and we are getting very close 0:10:50.520 --> 0:10:53.000 to the point where it will be too late. Other 0:10:53.080 --> 0:10:56.760 jurisdictions are racing ahead of us, and this is not 0:10:56.800 --> 0:10:59.720 the way it should be. The European Union, with its 0:11:00.240 --> 0:11:08.439 markets in digital assets regulations, is going to be ahead 0:11:08.440 --> 0:11:11.000 of the UK. You have to go back a very 0:11:11.040 --> 0:11:13.880 long way to find a time when the European Union 0:11:14.000 --> 0:11:19.640 was ahead of the UK in regulating emerging financial markets technology. 0:11:19.679 --> 0:11:22.800 That has always been our specialty and our strong point, 0:11:23.040 --> 0:11:25.319 and we need to get ourselves back at the front 0:11:25.320 --> 0:11:27.680 of the pack. So obviously you were no supporter of 0:11:27.720 --> 0:11:30.199 the believing the opin union, but you know when it happened, 0:11:30.280 --> 0:11:33.880 the decision was made. So but one of the arguments, 0:11:33.920 --> 0:11:36.840 of course for Brexit was was regulation was not being 0:11:37.080 --> 0:11:40.680 tied to the beer moth of Brussels to be able 0:11:40.720 --> 0:11:43.199 to liberate the City of London. But what you're saying 0:11:43.240 --> 0:11:46.000 is that the particularly as it pertains to crypto, the 0:11:46.000 --> 0:11:49.920 opposite is happening. Well, as it pertains to everything, it 0:11:49.960 --> 0:11:52.640 didn't happen. Where has this been? Where has been this 0:11:52.920 --> 0:11:58.720 deregulatory tsunami? And of course the truth is because London 0:11:58.800 --> 0:12:03.960 does still depend very much on access to European markets, 0:12:04.280 --> 0:12:09.120 not no longer as of right, but that access depends 0:12:09.240 --> 0:12:15.119 on a broad alignment of UK and European regulatory environments. 0:12:15.200 --> 0:12:18.439 So look, one of the reasons why I did not 0:12:18.520 --> 0:12:21.760 support the proposal to exit the Single Market was that 0:12:22.800 --> 0:12:27.559 I could absolutely understand theoretically the opportunities of a massive 0:12:27.640 --> 0:12:31.760 deregulatory splurge, but I never believed that, for a variety 0:12:31.760 --> 0:12:34.439 of reasons, we would deliver it. But was it about 0:12:34.520 --> 0:12:37.080 public but have supported or was it deregulation or just 0:12:37.160 --> 0:12:39.640 smarter regulation? And that's the problem with crypto, isn't it. 0:12:39.679 --> 0:12:41.400 We need there needs to be a new set of rules, 0:12:41.440 --> 0:12:45.079 not just ripping up the rules. So about with crypto, 0:12:45.080 --> 0:12:47.720 it's the problem is the opposite. The problem is that 0:12:47.720 --> 0:12:51.000 there are no regulations and nobody quite knows where they stand. 0:12:51.720 --> 0:12:54.200 It's it's a bit of a wild West and has 0:12:54.280 --> 0:12:59.800 gained frankly a mixed reputation, particularly among policymakers and politicians 0:12:59.840 --> 0:13:03.480 and the public people who are serious players in the 0:13:03.520 --> 0:13:07.520 crypto market want to see a proper regulatory regime in 0:13:07.600 --> 0:13:14.040 place that weeds out bad practice, protects consumers, and creates 0:13:14.040 --> 0:13:19.080 a proper set of rules that ensures the system operates fairly, 0:13:19.200 --> 0:13:22.560 properly and in a in a well protected way. So 0:13:22.679 --> 0:13:26.120 so what's more essential now? And again we talked about cryptocurrencies, 0:13:26.160 --> 0:13:29.200 but this can be bitcoin, ether, tether. At the same time, 0:13:29.200 --> 0:13:32.520 it's also you know, digital coins for example for europound 0:13:32.600 --> 0:13:36.320 and things like that. So what's what's important is that 0:13:36.360 --> 0:13:41.880 we create the infrastructure for digital trading. At the moment, 0:13:42.200 --> 0:13:45.320 that is all about trading crypto assets, because those are 0:13:45.320 --> 0:13:49.440 the only digitally traded assets that exist. But getting this right, 0:13:49.520 --> 0:13:53.120 getting the rules around digital trading right, will be an 0:13:53.240 --> 0:13:58.360 essential prerequisite for being a player in the digitization of 0:13:58.400 --> 0:14:01.800 traditional financial assets. So at the moment, it's about bitcoin, 0:14:02.280 --> 0:14:05.320 but in one to three I can't tell you how 0:14:05.320 --> 0:14:09.319 many years time it's going to be about token ized equities, 0:14:09.400 --> 0:14:14.119 tokenized bonds, trading them over digital platforms with instant settlement 0:14:14.800 --> 0:14:20.080 very efficiently, very securely. And the jurisdictions that have embraced 0:14:20.160 --> 0:14:24.520 this technology that have regulated it properly and effectively will 0:14:24.600 --> 0:14:27.400 be the ones that developed these markets and they will 0:14:27.440 --> 0:14:30.600 become the new hubs. And there's anyone doing that now, well, 0:14:30.720 --> 0:14:36.560 the Swiss, the Europeans are the whole European Union. Well, 0:14:36.640 --> 0:14:42.120 the European Union regulatory environment is moving to be able 0:14:42.160 --> 0:14:46.800 to respond to this challenge. The Germans have shown some 0:14:47.240 --> 0:14:50.480 appetite to move ahead, and the British but well, the 0:14:50.480 --> 0:14:53.680 the uk f c A is still looking at it, 0:14:55.080 --> 0:14:59.080 but progress has been frankly rather slow. The Chancellor has 0:14:59.120 --> 0:15:02.960 made very encouraging statements about the need for Britain to 0:15:03.080 --> 0:15:05.520 embrace this technology and to be in the lead, but 0:15:05.600 --> 0:15:09.240 the reality, i'm afraid hasn't yet matched the rhetoric. It's 0:15:09.280 --> 0:15:12.200 not too late, but they really do have to move 0:15:12.520 --> 0:15:15.120 over the next couple of months if they're going to 0:15:15.160 --> 0:15:17.520 be able to get back into the lead. Does a 0:15:17.600 --> 0:15:20.680 government need to take a view on bitcoin if it's 0:15:20.680 --> 0:15:24.840 going to introduce some of this regulation. Absolutely not. My 0:15:24.880 --> 0:15:28.600 own personal position is that I am not remotely interested 0:15:29.120 --> 0:15:34.000 in cryptocurrencies and crypto assets. What I am interested in 0:15:34.680 --> 0:15:39.920 is using the current marketplace for crypto assets to build 0:15:39.960 --> 0:15:45.400 the underlying infrastructure that will allow the trading of traditional 0:15:45.440 --> 0:15:49.000 financial assets over those digital rails in the not too 0:15:49.080 --> 0:15:51.160 distant future. So why do you think the FSA is 0:15:51.240 --> 0:15:55.200 late to the game. Partly, it's a bandwidth issue capacity issue. 0:15:56.560 --> 0:16:02.040 This is a very new area of technology. It's very 0:16:02.040 --> 0:16:06.240 difficult for public sector bodies with public sector pay structures 0:16:06.280 --> 0:16:13.040 to recruit the best and the brightest into these areas. Personally, 0:16:13.080 --> 0:16:15.760 I think the f c A should have gone to 0:16:15.840 --> 0:16:19.240 the industry and said we need secondis we can't. You know, 0:16:19.280 --> 0:16:21.280 we can't hire the people we need. We need the 0:16:21.320 --> 0:16:24.560 industry to provide us with the talent to work up 0:16:24.880 --> 0:16:27.680 the regimes we need to introduce. But I think to 0:16:27.720 --> 0:16:30.320 be fair to the regulators, it's also that this has 0:16:30.360 --> 0:16:34.600 been a period of immense stress for regulators that they're 0:16:34.640 --> 0:16:37.760 dealing with the consequences of Brexit, having to put in 0:16:37.840 --> 0:16:42.160 place temporary permissions regimes both in wood and outward, and 0:16:42.280 --> 0:16:45.160 at the same time having to deal with the consequences 0:16:45.200 --> 0:16:49.480 of covid um and the impact on their own working arrangements. 0:16:49.480 --> 0:16:53.320 So I think there's been a bandwidth challenge, but we 0:16:53.400 --> 0:16:56.600 have to overcome it because if we look at our history, 0:16:57.160 --> 0:16:59.720 it's clear that one of Our advantage is one of 0:16:59.720 --> 0:17:04.480 our comparative advantages has always been smarter regulation. The UK 0:17:04.720 --> 0:17:09.560 does regulation well, whether it's um, you know, financial regulation, 0:17:09.640 --> 0:17:13.800 whether it's going back a couple of decades, human fertilization 0:17:13.800 --> 0:17:17.720 and embryology. We've we've shown time and time again how 0:17:17.800 --> 0:17:22.640 getting the regulatory environment right, how taking an early move, 0:17:22.760 --> 0:17:25.040 making an early move, taking a little bit of risk, 0:17:25.840 --> 0:17:29.040 we can build whole industries and get the UK into 0:17:29.080 --> 0:17:31.000 a position of leadership. And that's what we need to 0:17:31.000 --> 0:17:32.520 do again here now. I mean the f c A 0:17:32.560 --> 0:17:35.360 would say that as you say, we've got a reputation 0:17:35.440 --> 0:17:37.920 for the gold standard of regulation and they might not 0:17:38.000 --> 0:17:40.080 be first out the gate on this, but they're going 0:17:40.119 --> 0:17:43.520 to build the best system and really protecting It's about 0:17:43.520 --> 0:17:46.359 protecting consumers, isn't it. And we've seen the volatility obviously 0:17:46.359 --> 0:17:50.520 in crypto markets um so far this year. But it 0:17:50.560 --> 0:17:52.760 sounds like you're saying, really they just is more of 0:17:52.800 --> 0:17:55.480 a an aptitude on that part you said they don't 0:17:55.480 --> 0:17:57.359 have the people to do it, that they haven't got this. 0:17:57.480 --> 0:18:00.119 I think they. I think there's a capacity is. I 0:18:00.119 --> 0:18:02.040 wouldn't call that ineptitude, but I think there is a 0:18:02.080 --> 0:18:05.360 capacity issue. But I think we need to distinguish between 0:18:05.440 --> 0:18:11.159 retail and wholesale institutional business. What matters for the future 0:18:11.280 --> 0:18:15.119 of London's financial markets is that we create the infrastructure 0:18:15.480 --> 0:18:21.640 for digital wholesale trading. Now, I completely agree that there 0:18:21.680 --> 0:18:27.440 needs to be good quality consumer protection regulation around digital assets. 0:18:27.800 --> 0:18:30.920 And you know, I take no view on the digital 0:18:30.920 --> 0:18:33.440 currency markets, but I can see that there is huge 0:18:33.520 --> 0:18:38.479 risk in them for retail participants. But let's focus on 0:18:38.480 --> 0:18:42.960 on the real play here, which is building a wholesale 0:18:43.160 --> 0:18:49.200 digital financial services market which will allow London to be 0:18:49.400 --> 0:18:52.920 a leader in the future. And while the FCA's ambition 0:18:53.200 --> 0:18:57.880 to have the best system is of course admirable, it's 0:18:57.880 --> 0:19:00.800 no good having the best system that ums, you know, 0:19:01.080 --> 0:19:04.719 years after everyone else has already taken control of the market. 0:19:04.880 --> 0:19:07.520 What we're doing at the moment is squeezing people out 0:19:07.560 --> 0:19:11.400 of the UK, squeezing operators out of the UK two 0:19:11.400 --> 0:19:15.920 places like Kenya, British Virgin Islands. If you really care 0:19:15.960 --> 0:19:20.760 about regulation and having a well managed financial services industry, 0:19:21.119 --> 0:19:23.720 you would want to keep these people in London, where 0:19:23.720 --> 0:19:28.800 our regulation will certainly be better and more resilient. After Brexit, 0:19:28.880 --> 0:19:32.000 we saw the majority of share trading in Europe flipped 0:19:32.000 --> 0:19:34.520 from London into utter down. I mean it's crypta. If 0:19:34.560 --> 0:19:38.320 we can build these this new infrastructure, is it a 0:19:38.359 --> 0:19:40.439 way to reverse some of that, to make London the 0:19:40.480 --> 0:19:44.280 trading hub again of Europe despite Brexit or does brexit 0:19:44.320 --> 0:19:47.639 mean that could never happen again? I think Brexit is 0:19:47.680 --> 0:19:52.560 a challenge for London regaining its dominance. But if we 0:19:52.960 --> 0:19:59.320 if we clearly have the superior infrastructure for digital trading, 0:19:59.480 --> 0:20:03.480 as did little trading attains rapid take up over the 0:20:03.520 --> 0:20:07.240 next few years, the market will make its own decisions 0:20:07.280 --> 0:20:10.800 about where it wants these trading activities to happen. And 0:20:10.960 --> 0:20:14.159 you know, it's not just about Frankfurt or London, Amsterdam 0:20:14.280 --> 0:20:17.760 or London. It's about places like Dubai. It's about places 0:20:17.800 --> 0:20:22.080 like Singapore and some states in the US that are 0:20:22.080 --> 0:20:25.600 beginning to develop digital trading hubs. Isn't it all about 0:20:25.720 --> 0:20:28.680 risk and how that there are difficult questions for example, 0:20:28.880 --> 0:20:31.680 if there's a stable coin that was systemic that would 0:20:31.680 --> 0:20:35.320 go bust, whether insolvency rules apply to it. Of course 0:20:35.359 --> 0:20:38.800 there are. It's not just about consumer protection, it's also 0:20:38.840 --> 0:20:43.440 about systemic protection, and that's why we need a properly 0:20:43.480 --> 0:20:48.720 regulated environment for all forms of digital asset trading. Do 0:20:48.760 --> 0:20:52.399 you think it all come? Yes? How fast? Well? I 0:20:52.400 --> 0:20:55.159 think it will come globally because so many people are 0:20:55.160 --> 0:20:58.560 working on it and committed to it. I still I 0:20:59.119 --> 0:21:03.040 remain a notist that the UK will prove to be 0:21:03.080 --> 0:21:05.000 a late starter out of the gate, But when it 0:21:05.040 --> 0:21:08.080 comes out of the gate, it will move quickly to 0:21:08.160 --> 0:21:11.040 take leadership and there is still an opportunity to do that. 0:21:11.119 --> 0:21:13.679 So I hope over the next few months we're going 0:21:13.720 --> 0:21:17.320 to see the f c A move ahead with its 0:21:17.560 --> 0:21:21.000 digital regulatory agenda and that you know, next year it 0:21:21.040 --> 0:21:24.639 will become apparent that London will be the location of 0:21:24.720 --> 0:21:27.000 choice for people looking to play in this market. Lord 0:21:27.040 --> 0:21:28.960 haven't thank you so much for joining in the city. 0:21:30.640 --> 0:21:32.880 David's headline caught my eye a little while back when 0:21:32.920 --> 0:21:36.200 we're prepping for this podcast. It could destroy your life 0:21:36.240 --> 0:21:38.840 crypto trading goes to rehab and that we need to 0:21:38.880 --> 0:21:42.280 bring this to our listeners. Right, So, if trading crypto 0:21:42.600 --> 0:21:45.320 means you have to go to rehab, maybe the UK 0:21:45.480 --> 0:21:47.479 is right to be tightening up the rules for it. 0:21:47.520 --> 0:21:51.200 You know, if it's addictive, if it's like smoking or cocaine, 0:21:52.920 --> 0:21:54.480 you know, maybe you need to regulate it to pay better. 0:21:54.560 --> 0:21:57.480 Let's bring in personal finance reporter Charlie Wells. So, Charlie, 0:21:57.560 --> 0:22:02.000 full disclosure. We were I really want you to talk 0:22:02.040 --> 0:22:06.239 about book coin on the past. So really you're here 0:22:06.280 --> 0:22:09.080 to talk about your story on rehab centers for crypto addicts. 0:22:09.080 --> 0:22:10.720 Now it sounds like a joke, but it's actually a 0:22:10.760 --> 0:22:14.640 real thing. Addiction specialists are offering treatments for a compulsive 0:22:14.680 --> 0:22:18.000 crypto traders. I should not be laughing. It's fine, it's 0:22:18.560 --> 0:22:22.200 new and untest. This is new and untested. What's your story. 0:22:22.640 --> 0:22:25.439 We throw around the word addiction all the time. People say, oh, 0:22:25.440 --> 0:22:28.760 I'm addicted to exercise, I'm addicted to chocolate. And one 0:22:28.760 --> 0:22:31.000 of the addictions that people have been throwing around a 0:22:31.000 --> 0:22:34.480 lot has been cryptocurrency trading, especially over the past few years, 0:22:34.600 --> 0:22:38.040 especially over the pandemic period. So me Anda Couli wanted 0:22:38.080 --> 0:22:40.600 to ask, is this something that you can actually be 0:22:41.000 --> 0:22:44.359