Ex-Chancellor Philip Hammond said the UK must move quickly on digital assets to secure its post-Brexit advantage in financial services.
Lord Hammond, who recently joined crypto start-up Copper, believes digital assets could give London a unique edge over European competitors. In an interview with City A.M. the former chancellor of the exchequer said he hopes legislators will support the use of new technology to trade digital assets and create a tokenized financial services sector.
“I personally think the momentum is now unstoppable,” said Hammond. “We need to move quickly and effectively to secure London’s position.”
“If we don’t watch carefully we will find some surprising people are ahead of us,” he cautioned, warning that European competitors see digital assets as an opportunity to overtake the UK as a world financial services hub.
Hammond: ‘It is going to happen’
Digital asset custodian Copper, which Hammond last month joined a senior advisor, enables over 400 institutional investors including banks to handle and trade crypto. The company brings together the worlds of traditional and decentralized finance, a collision which Hammond sees as inevitable.
“Most institutions know that whether we like it or don’t like it – it is going to happen,” said Hammond. “It’s not something anybody running a major business in financial services can hide from.”
While the UK’s former chancellor does not invest in crypto himself he is sold on the transformative potential of its underlying technology and believes that blockchain could underpin a future trading system.
Hammond, however, is concerned by the UK’s lack of regulatory clarity. According to the former Chancellor London’s regulatory community has “taken its eye off the ball on some newer technology developments” because of its focus on Brexit.
“If we’re being very honest about it, we have already allowed others to get ahead of us. Regulators have been heavily distracted,” said Hammond.
By contrast, the EU has proposed draft digital asset regimes to provide much needed clarity for crypto businesses. Europe’s Markets in Crypto Assets (MiCA) framework pushes for centralised supervision of crypto markets and provides guidelines for consumer protections.
“They can’t replicate a financial services centre on the scale of London and therefore we still have the ball in our court,” said Hammond. “But we do need to move pretty quickly to show that this technology is recognised and accepted by legislators and regulators in the UK.”
Hammond, who served as Chancellor for three years under Theresa May and became a Life Peer in 2020, has been a longstanding advocate for new financial technologies.
Alongside his advisory role at Copper Hammond works as a consultant for challenger bank OakNorth, a role which recently landed him in hot water with parliament’s lobbying watchdog for contacting a Treasury official on the company’s behalf.
The government took no action over the committee’s rebuke adding fuel to a Westminster row over whether political representatives should be allowed to take on jobs outside their parliamentary duties.
Hammond thinks it is “beneficial to the system, that we have people in parliament with a diverse range of experience,” but conceded that “there’s always a balance to be struck.”