UK Investment Bank Chair Advocates for Crypto Tax to Boost Local Stock Investments
In a recent statement, Lisa Gordon, the chair of investment bank Cavendish, urged the United Kingdom to implement a tax on cryptocurrency purchases. She believes that such a measure could incentivize Britons to invest in local stocks, potentially benefiting the nation’s economy. Her remarks were highlighted in a report by The Times published on March 23. Concerns Over Crypto Ownership
Gordon expressed alarm at the finding that over half of individuals under the age of 45 in the UK now own cryptocurrencies but not equities. “It should terrify all of us that over half of under-45s own crypto and no equities,” Gordon stated. She proposed the idea of reducing the existing 0.5% stamp duty on shares listed on the London Stock Exchange, which currently generates approximately £3 billion ($3.9 billion) annually, and applying it to crypto purchases as a means to encourage investment in local equities.
By directing investment towards local companies, Gordon believes that additional public offerings might emerge and contribute to a strengthened economy. She referred to cryptocurrency as a “non-productive asset” that fails to reinvest in economic growth, arguing that “equities provide growth capital to companies that employ people, innovate, and pay corporation tax. That is a social contract. We shouldn’t be afraid of advocating for that.”
Current Landscape of Crypto Ownership
As reported by the UK’s Financial Conduct Authority (FCA) in November, crypto ownership had risen to 12% of the adult population, translating to around 7 million people, with a significant portion (36%) being under 55. According to Gordon, many individuals have shifted towards saving rather than investing, a trend she claimed could jeopardize their financial security in retirement. The FCA’s 2022 survey indicated that 70% of adults possessed a savings account, while only 38% held shares directly or indirectly.
Furthermore, a follow-up survey revealed that by January 2024, the cost-of-living crisis had prompted 44% of adults to either cease or reduce their saving and investing efforts. Approximately a quarter of respondents reported dipping into savings or liquidating their investments to meet everyday expenses.
Efforts to Revitalize the Local Market
Gordon is also a contributing member of the Capital Markets Industry Taskforce, composed of industry leaders seeking to rejuvenate the local market, a move that would significantly benefit Cavendish as it advises firms on navigating public offerings. Recent findings from consulting giant EY highlighted that the London stock market experienced one of its quietest years on record in 2023, with only 18 new listings, down from 23 in the previous year.
During the same time frame, EY reported that 88 companies delisted or migrated from the London exchange, citing declining liquidity and lower valuations in comparison to markets like the United States. Despite these challenges, Gordon maintained that the UK remains a “safe haven” for investments, especially compared to the US market, which has faced significant losses driven by concerns over economic stability and government policies.
Crypto Market Challenges
The cryptocurrency market has mirrored the volatility seen in US equities, with Bitcoin (BTC) experiencing an 11% decline over the past month. Struggling to maintain support above $85,000 since early March, Bitcoin recently showed signs of recovery, rising 2% in the past 24 hours to trade around $85,640. As the conversation around cryptocurrency and local investments continues, Gordon’s proposals may spark further debate on how to foster a more robust economy through enhanced investment in local equities.
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