Former LSE Chief Wants UK To Embrace Cryptocurrencies

Xavier Rolet, a former top executive with the London Stock Exchange, has called on the UK government to be proactive in a recent paper he published. Rolet wants the government to back special purpose acquisition companies (SPACs) and cryptocurrencies so London can retain a top business destination in the post-Brexit era.

Xavier Asks UK To Build A Crypto-Friendly Environment

The report first published on Bloomberg said that London might likely see itself left behind when other financial powers embrace the changing economic climate. 

The paper, written alongside key financial experts like Clive Black, Chief Researcher at Shore Capital, and Matthew Elliot of Brexit fame, urged the government to permit investors to own cryptocurrencies like Bitcoin. 

He also drew the government’s attention to SPACs or blank-check firms, saying they possess the potential to change the fortune of the country after it separated from the European Union in February.

This is not the first time the UK government has been asked to commit to a crypto-focused future by financial experts. 

Professor David McMillan of the University of Stirling fame had previously encouraged the British government to provide a crypto-friendly environment if it still plans on remaining a financial big-wig after Brexit.

The advent of trading apps (Robinhood) and the subsequent rise in crypto-assets have seen retail investors picking interests in the financial markets. Bitcoin’s bull run of 2017 saw the world noticing the previously disregarded digital asset. Now its industry-leading ROI has many people looking for ways even to own a piece of the asset following its rally to $58,000, a few days ago.

Blank check firms are also a notable addition to any economy. With SPACs generating much of its capital from an initial public offering (IPO), most big-time investors are always willing to part with their money. 

The SPAC industry has seen tremendous growth, with over 400% in the last five years.

Wall Street investors love IPOs backed by blank check companies as it means significant investments will come into the economy once it is listed. Xavier sees SPACs raising capital for small-sized companies as a plus for the economy. An acquisition will instantaneously increase the acquired company’s value by 20%.

London Stock Exchange Looks To Blockchain

In 2019, the 300-year London stock house turned a bend in its shift to the digital age. Realizing the potential distributed ledger technology (DLT) possesses, the world’s oldest stock exchange bought a minority share in Nivaura, a start-up that claims to be the first in the world to issue a cryptocurrency-based bond.

In speaking on their investment into a relatively unknown financial instrument, Nikhil Rathi, CEO of London Stock Exchange, said:

You can certainly see distributed ledger technology having an application in the issuance process,” he said in an interview this week. “I can see that technology being used in settlement too.”

Rathi also said blockchain’s ability to record transaction data across a wide array of computer networks instead of a central server could greatly benefit the issuance process.

Cryptocurrencies have not been able to have a lasting impact in the North-West of Europe. In a decree published on Jan.6, 2021, UK’s top financial body Financial Conduct Authority (FCA), banned sales of derivatives and exchange-traded-notes (ETNs) that “reference certain types of crypto assets to retail consumers.”