This week City A.M. reporters Lily Russell-Jones and Charlie Conchie sit down with Conservative MP and former Health Secretary Matt Hancock.
They chat about his outspoken views on crypto, regulation, and the need for accessibiity when it comes to crypto investing; go through his post-Cabinet ambitions; and unpick his decision-making at the height of the pandemic.
Episode transcript (auto-generated)
Lily Russell-Jones 0:08 Hello and welcome to another episode of The Tech weekly podcast. I’m Lily Russell-Jones, City AM’s Crypto reporter and I’m Charlie Conchie, City A.M.’s Investment reporter. Today we’re joined by the UK former Health Secretary Matt Hancock who has emerged as a champion for the UK crypto industry in recent months. Thanks for joining us. It’s great to be here. You’ve been increasingly vocal about your support for crypto, can you tell us what’s behind your interest in cryptocurrencies?Matt Hancock 0:32 Well, yes, I’ve long taken an interest in FinTech. Before I was in politics, I was at the Bank of England. And before that, I was in my family tech business. So it’s kind of my, my background. And, you know, having been health secretary for for three years, and then coming out of that I looked around to see, you know, what, what had been going on, whilst, whilst I’ve been concentrating on other matters, and I was just really surprised at the lack of a positive voice for new innovations, especially in finance, and crypto is the sort of the edge the point on the spear in that if you like, but actually, it’s about, you know, making the case that the UK succeeds in the world, and becomes prosperous, if we’re embracing of new technologies, innovations, especially in finance, throughout decades, or even centuries, you know, the UK, London in particular, but that that the success of London benefits are everywhere else in the UK as well. We have succeeded when we’ve embraced modern technology. cryptocurrency is the latest controversial new technology, they’re always controversial at first until they become ubiquitous. And we’ve got to make the argument and put the policy in place that welcomes crypto. So I went into a debate in the House of Commons. And I was amazed to find that, you know, I was one of the few voices, you know, given his credit other than the minister, making the case for the UK being the home of crypto. And so, you know, my my, my mission in this if you like is to is to make the UK love crypto, if we can love crypto, we can embrace it, we can get a good strong regulatory system, a liberal regulatory system, but nevertheless, having the rules there that are appropriate to the to the modern use of technology. And digital through crypto is disrupting finance in the same way as you know, it disrupted retail through the use of internet shopping or the way that social media disrupted traditional media. And we’re now seeing that play through in finance, and we have to embrace this because otherwise, we’ll just get left behind. Lily Russell-Jones 3:00 You spoken about the importance of embracing crypto and getting UK to love crypto, but you don’t hold crypto yourself. Matt Hancock 3:06 No. And I’ve chosen not to simply for the you know, the narrow reason that I don’t want it either to be or to look like I’m talking about a book, when when a journalist who isn’t an expert in crypto, you know, asks a gotcha question. And they do which is odd. Do you own any NF T’s? And the answer is no. In fact, I yeah, I was I was offered an NF T, very low value NF t as a thank you for doing speech. I said, No, I don’t want to do that. I, I just want because I care so much about the agenda. Ironically, it is it is easier to speak more cleanly if you like about it. Now, there’s another argument which is, you know, you should have people talking about these things who, who are invested, who are who who know it through as being investors. And I’m not against that at all. If another, you know, MP wanted to stand up and support crypto and say I’ve been investing for 10 years. And they’re awesome, then I am all for that I’m not criticising that. It’s just it’s just easier actually to speak in favour of crypto if I don’t own any. Lily Russell-Jones 4:12 Can you tell us who some of those crypto investing in no Matt Hancock 4:15 tell you about the personal financial arrangements of MBs it anyway? If it’s if it’s if it needs to be declared? I’m sure it will be declared. That’s not the point. The point is that you? That’s exactly the sort of gotcha question I’m avoiding by not owning any crypto. No, I’m just interested that we’ve dived into a point about political debate. The point is, in that debate, we need people who are pro innovation, pro the future and of course, a regulatory regime to ensure that crypto works for society. And for that, if it’s too heavy handed, it’ll just happen elsewhere. It’s not like we can stop this thing or should in my view. But so it needs to be it needs to protect, protect people have an eye to the financial stability issues, etc. And but also be welcoming. And and that’s what you know talking to most people in crypto, that’s what people want. Lily Russell-Jones 5:08 Speaking of the UK has regulatory arrangements, the chancellor last month announced plans to transformed Britain into a global hub for digital assets, for example, by integrating stable coins into the UK is payment system and creating tax incentives for the crypto industry to develop in the UK. Can you give us any idea of what could be coming down the track? Matt Hancock 5:27 Well, I think firstly, I think this was a really positive statement by by Rishi Sunak. EO he has grasped the nettle. And the paper that he put out did exactly what we needed, which is to say, the UK wants to be a home to crypto when it needs to be regulated to ensure that it’s done in a safe way. But that regulation can’t be over burdensome. Obviously, what matters next is the next level of detail. There are there are there, there are regulatory pieces, there are tax pieces, for instance, how you treat a crypto transaction is critical. Because if you treat it like a, you know, like a like a transaction in physical property, then you’ll never be able to have an effective market. And so HMRC need to come to the table and play their part. And I think so far they’ve been making decisions, you know, just looking at it through a narrow lens, if you like of, well, this is a new thing, how do we treat it as opposed to asking the question, how do we ensure that the way that we tax things is consistent with growing this industry here in the UK? The policy question if you like that needs to change and the paper signal, the Treasury paper signal that will change. And we need to ensure that the that that customers get that consumers get the right level of information. Now, I think very strongly that people should be trusted, so long as you get decent information. So that means disclosure rules, rules around advertising. But still allow Caveat emptor, you know, people should be able to invest their own money if they want to. Charlie Conchie 7:04 You spoken a bit there about the kind of gaps that are in the strategy. Is there a sort of gap in the skill sets? Do you feel as well? Do we have the right people in place to be making these? Lily Russell-Jones 7:13 Well, we’ve absolutely need to have people who understand crypto in the policy space. I’ve talked about attitudes here in Parliament, we’ve got to make sure that there are people who understand crypto in the regulators in the Bank of England in the FCA in the Treasury have demonstrated they really get this now. That’s great. There have been some new appointments at the FCA which I welcome. The Bank of England has been, I think, very smart and what they’ve said, which is essentially start from the principle that there should be broad equivalence in terms of function of a of a of a new technology of crypto technology. And but it this is hard, because there’s a shortage of people who have the necessary skills. And so it is, you know, it’s not it’s not straightforward to get the right people in the right places. But it’s critical that the FCA in particular, have people who who understand crypto regulating crypto because otherwise you have all sorts of regulatory mistakes Charlie Conchie 8:22 Are you winning rounds from your colleagues in Parliament to crypto do you feel? Matt Hancock 8:26 Well, I definitely think that the discussions improved in the last six months. And I didn’t how much that’s done to me. But the combination of the government moving but also some things that have happened to externally. So, you know, one of the best advocates for the use of crypto now is Volodymyr Zelensky, when he went out and said crypto is incredibly helpful for financing the defence of Ukraine. That helps enormously because he you know, we need to make and win the argument that if you want the sanctions in place, having a currency that’s on the blockchain that can be interrogated, and is designed in such a way that it is essential, has essentially has transparency built into it. It’s actually better for implementing sanctions, if done properly than fiat currency. We’ve got to win these arguments. And so people you know, when Zelensky comes and says crypto is a force for good in the world, you know, that is as powerful as anybody. Lily Russell-Jones 9:26 But at the same time, Ukraine’s deputy prime minister called on crypto exchanges to stop allowing Russia and Belarus and clients to use platforms and exchanges to trade crypto because of concerns about sanctions evasion. Yes, there’s a tension there between what the technology can do and how it needs to be regulated. 100% Matt Hancock 9:43 But the people to make the decision about who should be sanctioned have to be countries, not companies. And here I’ve got a lot of sympathy with what CZ said about violence when he was asked about this. He was you know, why don’t you as the Major exchange are one of the major exchanges. Why don’t you stop all Russians and Belarusians? Well, that’s a bit like saying to somebody to a bank, you know, please freeze the assets of every single Russian and Belarusian, actually, well, ironically, at the same time, we’re trying to put in place a regulatory structure that says you should, through the exchange, be able to get access to your assets. But as soon as somebody is sanctioned by a bias by the by the West, basically by a state that is legitimately elected, then that sanctions should be put in place. And that’s what they’re doing. And through a regulated exchange, that is you can put those sanctions in place immediately, in through blockchain, that blockchain technology based technology, actually more quickly than you can through fit. So let’s make sure that the right roles and responsibilities are here. Right. It is for it is for legitimate governments to decide who should be sanctioned, is then for the exchange to implement those sanctions. It isn’t for a company to decide who should be sanctioned. And I think that is a you know, that’s where we’ve got to, and it’s, and, and, but it takes, it takes one level of explanation. Lily Russell-Jones 11:16 Yeah. So I would say that the crypto industry works slightly differently, to the extent that you can have decentralised exchanges, where you might not know who’s accessing. Matt Hancock 11:26 So products. So in the same way that in fear, you can have lorry loads of cash driving from one place to another. And you can have banks in oblique jurisdictions, so of course there are, there are, there are challenges round the edges. But if you look at the scale of those transactions, they are relatively small in the grand scheme of things, it doesn’t take away from the fact they also have to be dealt with, but you get problems like that in fear. And in crypto. You know, just because there are bad actors doesn’t mean that every mechanism bad actors use is bad, but you have to you you have to target them as as well as you can using those technologies. An example is in the in the US, the FBI has successfully traced criminal payments through exchanges, and then have arrested people on the back of those. That’s the system working well, using the modern technology, just saying this technology is used by bad people, you know, therefore we should ban it. That’s that’s totally illogical. I mean, you know, bad people use mobile phones doesn’t mean that we ban mobile phones, it means that we try to use, you know, we try to, we try to bring law enforcement using modern technology. Lily Russell-Jones 12:51 Coming back to stable coins. A recent House of Lords report, dubbed stable coins a solution in search of a problem, suggesting that the technology doesn’t really have a use case. So I think it’s safe to say that a lot of your colleagues aren’t yet sold on the potential of crypto. Matt Hancock 13:07 Well, that was specific, I’ve read that report. And it’s specifically about a retail cbdc. So, you know, the question of whether you want everyone to have essentially have an account with the Bank of England, I think that is a problem. That that is that is a it’s an idea that really isn’t solving a big problem in the UK. You know, I worked at the Bank of England, I used to have an account with the Bank of England, and the Bank of England long ago stopped having bank accounts for retail customers, including its own employees. Because it was it was it was ridiculous. The Bank of England’s is a central bank, not a retail bank. So, but the but the use case for for stable coins for private stable coins, even potentially for wholesale cbdc is much more advanced. Now in the UK domestically, of course, we have a superb payment system that is super fast. And that is very, very cheap, and free in almost all use cases. And in a way we already have a digital currency right? I came up here on the tube this morning, I put my phone next to the tube reader. And it charged me two pounds 60 or whatever it is to go on the tube. And and so there isn’t a domestic use case for radical change in the payment system because we’ve got a very good payments infrastructure. But internationally, payments are really expensive. And within some countries, including some advanced countries like the United States, between different countries within the European Union. There are big frictions and costs. And so there are there are use cases, there’s strong use cases for stable coins essentially as bringing making the payment system more efficient. And then once you load on the ability to have smart contracts and build in some of the have contractual agreements into the way that the payment system operates. So to say, if these conditions exist, then make this payment to build that into the, into the contract. So it’s automatic, rather than has to be triggered by either party. You know, there are all sorts of use cases, many of which we haven’t yet imagined. So we’ve got to be quite, we’ve got to be specific about what what you know, is and isn’t being criticised. Lily Russell-Jones 15:26 Okay. And does the chancellor Rishi Sunak, share your enthusiasm for crypto beyond stable coins? Matt Hancock 15:32 He Yes, I think so. Yeah. He shares an enthusiasm. We share an enthusiasm for being the home of, of innovation and modern technology and its application in not just in finance, but actually across the board. And I think the Treasury paper demonstrated that. Lily Russell-Jones 15:52 So turning to retail traders and the public’s involvement. Yeah, you’ve spoken quite a lot about the right to invest in giving Yeah, investors in the UK the ability to access crypto, regardless of their net worth. Matt Hancock 16:04 Yeah, I think he takes incredibly patronising to say that unless you’re rich, you can’t invest in stuff. And it’s ultimately it is it creates financial exclusion. If you say you have to pass an exam or, or be worth a certain more than certain amount before you can invest in certain asset classes. And I think that the, frankly, I think over a couple of decades, well, meaning patronising regulation has stopped retail investors from being able to invest their own money right across the board. And crypto is one of the areas that currently you can invest in, and we mustn’t then bring in this sort of what I think is a terribly negative attitude about human capability that says that you’ve got to be loaded to invest in crypto. I mean, that’s it’s outrageous. It causes financial exclusion. It excludes people from being able to access good returns, not just in crypto, but actually but in and venture capital, all sorts of different areas. Because of these, these these patronising rules, and what matters is good information and up for the strong rules for consumer protection about information. And, and obviously good financial education, because we trust the people. Charlie Conchie 17:33 We’re talking in the midst of a sort of cost of living crisis. Nikhil rattie. Last week, chief of the FCA was saying that, you know, crypto investors do need to be prepared to lose all their money when they do invest Sure, those warnings, I think I’m really welcome that sort of warning. So is it responsible to be tight in crypto as a kind of financial inclusion? You know, measure? Yes, Matt Hancock 17:53 yes. And it’s terribly fascinating to think the opposite. It’s right to say, you may lose everything, but you may not right. If I buy a share in the in a company on the on the stock market, I might lose everything, right companies go bust all the time. And we don’t stop people from doing that. But what we’ve ended up doing is saying you could only buy shares in listed companies, which are increasingly the most boring utility based, highly regulated, low return businesses and all the high return businesses have gone private. And so you can’t access those sorts of returns. And to say the same about crypto would be outrageous, you know, people are smart. Yes, you have to protect people from poor information and from and from biassed information. So disclosure about conflicts of interest really, really important. But But to say that, you know, it’s the tone of this debate really grates with me to say, isn’t it? So worth using? The question isn’t it isn’t irresponsible to allow people to invest their own money? No, it’s not irresponsible. It’s grown up, and we’re a grown up country. Lily Russell-Jones 19:03 Okay, well, there seems to be a bit of a split between lawmakers and the regulators. Sure. Matt Hancock 19:08 Because it’s easier as a regulator to stop good things happening just in case they go wrong. And you know, I’ve heard people say, Oh, but what about this incident that happened or that incident or they said it was this company was probably okay, and then it went bust? Well, that happens all the time. Right. It’s called a market economy. And the regulator needs the support and the air cover to allow people to take risks. Sometimes risks go wrong, so long as you are clear about the risks in advance, and both as regulators and says the advertising rules and the other information based rules, you should then let people get on with it. So I’ve I’ve welcomed this statement from the FCA for two reasons. Firstly, because it genuinely says to people, you know, don’t invest more than you can afford to lose, and I’d appreciate that. But it secondly, I hope will give the FCA the ability, then not to stop, essentially everybody unless you’re rich from investing in crypto, because the FCA should rightly, say, we have warned people that you might lose everything. And but we have allowed you make those investments. And let’s just step out one more, right? Imagine if you came to this, you know, as a fresh policy question. And he said, I know, I know, I know, I know, what we’re going to do is we’re going to say there’s one rule for people who’ve got 10 million quid in the bank. And there’s a different rule for everybody else. It’s outrageous. Of course, you shouldn’t say that. Lily Russell-Jones 20:40 I think there’s such a wide range of misinformation out there about crypto and there have been so many scams, that surely a balance has to be struck between making sure that you have solid regulation around crypto and crypto itself as an asset before you say anyone’s free to invest Matt Hancock 20:56 money. We’re a free country, I think that’s terrible. Sure, there’s, there’s misinformation, let’s clean that up. There’s also there’s also, by the way, a load of scams that are in place, because there isn’t a high a decent regulatory structure. And a lot of thing, a lot of the scams are basically, you know, come put your money with me, they’re not done by crypto people at all. They’re just people pretending to be crypto investment opportunities. That’s not the fault of the people who work in crypto. That’s that’s bad behaviour. It’s potentially criminal behaviour, and it should be stopped. But it isn’t a reason to stop the world. And to say, we’re not going to have this industry here. And it’s certainly not a reason to say to your average retail investor, I’m terribly sorry. Because there’s a scam going on. somewhere else. We’re going to we’re going to exclude you from this, from the from this freedom to invest. Lily Russell-Jones 21:54 Can we talk about the optics of your involvement with crypto because I published an article based on some of your comments, and people reacted to it negatively online? And I would say that often the critics are louder than this. Oh, yeah. You’ve Matt Hancock 22:08 never read the comments. So in the comments, I’m sure some of the anti vaxxers Were having a go, Lily Russell-Jones 22:12 you know, well, it was more to do with people perceiving crypto to be untrustworthy. So can I ask you what motivates you to defend it? Matt Hancock 22:19 Oh, because, frankly, because nobody else was. There’s a, because it matters, right? This technology is going to change finance in a radical way, we’ve already seen whole sectors disrupted, this is coming to finance, if we as a country are not ahead of this curve, and not ready for it, then we will a miss out on an opportunity. But B we have the risk of losing an industry that is an incredibly productive part of our economy. And, you know, it isn’t a particularly, you know, sticking up for finance has never been a particularly fashionable thing to do. But it’s a but it’s really important to to the UK, and it has been through the, you know, through through decades. Charlie Conchie 23:10 Do we sort of zoom out even further than that? I suppose. And yeah, this as a topic. And as Lily mentioned, there’s still some fairly vocal critics around it. How much is this? Do you feel a kind of rehabilitation exercise? Choosing a topic that wasn’t associated with you at all? Matt Hancock 23:25 Well, that’s not quite right. Is it because I’ve been involved in in FinTech for years before I became health secretary. I was the digital Secretary before that. And so the and, you know, it’s an area that I’ve got a lot of background in and expertise in, for instance, having worked at the bank, so, you know, I feel like because I’m able to speak up, because I know some of the technical details, I wouldn’t pretend to be a an expert. I’m not you know, actively working in this space, obviously. But I have enough of a background to be able to, to be able to talk about it. And you can choose which topics you want to go into once you’re when you’re on the back benches. And you know, I’ve got a I’ve got a voice. And I don’t mind the the criticism from some you can’t make any difference if you if you’re not prepared to have some criticism and some of it’s reasonable and I’m, I enjoy engaging in that debate. And some of its unreasonable and you know, how Lily Russell-Jones 24:25 we’re getting onto the slightly more personal side of things. Now that you’ve left the cabinet, you’re publishing a diary from your time as health secretary, are you hoping to set the record straight about certain decision making during the time Well, I Matt Hancock 24:38 just feel like I’ve got a duty to tell the story as I experienced it, as I lived it. It’s about so you know, my aim is to tell the story, the tell the story straight from my point of view, and there’s you have this, it was such a extraordinary pet. rooted in, in, in the life of a country that I want to be able to do that Lily Russell-Jones 25:08 there’s still quite a lot of controversy around decision making that was made at the start of the pandemic. For example, the High Court this week declared that discharging patients from hospitals to care homes without tests, at the start of the pandemic was unlawful. Will you be explaining how that kind of decision making? Matt Hancock 25:24 My My goal is just to tell the story straight from from my seat as health secretary at the time? The you know, so in that instance, actually, the court judgement, if you read the whole thing makes it clear. And I’ve talked about this before it, you know, I’ve talked, I answered questions at the select committee a year ago about this, you know, we, I was worried about a symptomatic transmission, and we’d heard stories about asymptomatic transmission. But the official position of the advice that came to me, did not include this, and the court found that to be to be wrong. And so what matters to me in this space is that we learn, right, we’ve got to learn we are going to have another pandemic. I don’t like that fact. But it’s true. And one of the things that I found as health secretary was that there wasn’t like a manual on the shelf, you know, there hadn’t been a pandemic for a century. Yes, they’d been exercises, but there wasn’t the lived experience of going through it. Lily Russell-Jones 26:30 So you mentioned that you didn’t sort of take asymptomatic transmission into account because of the advice that you received on the ninth of March. So about a month before the policy to discharge people into care him so that tests was changed. Lord Bethel, who was the shortness of the House of Lords said large numbers of people are infected and infectious but completely asymptomatic and never go near a tasket. Yeah, what was the advice you were receiving different from the advice that he received? Matt Hancock 26:57 Well, so the the the honest truth here, which I’ve repeated endlessly, is that there were there were suspicions about asymptomatic transmission. You know, I first raised it back in January. And I, in fact, I called the the head of the WHO about it, because there were reports of it coming out of asymptomatic transmission in China. And I was told by him that that was a an error in translation. So I’ve been raising this issue other ministers had to, we’ve been answering questions about it in public about the uncertainty around it. The court specifically found that the advice on which the care home policy guidance was made did not include the definitive assessment of this. And that’s that was the error that the court found, and hence, it found its judgement. And I’ve made that clear. You know, it’s one of the things we’ve been, you know, the Prime Minister and I both said, repeatedly, is that, you know, we wish that we had known more about this at the time fighting the pandemic was all about making the best judgments you can in a world of, of limited information. And that’s, you know, that was the challenge at the time. Lily Russell-Jones 28:22 And do you think looking back now that that was a mistake? Matt Hancock 28:25 Oh, there were there were of course, not knowing enough about asymptomatic transmission with hindsight. The question is, what do you do at the time, and the, you know, when you don’t have all this information? As if you if you read the court judgement, it literally says that I was not advised on this point. Now, but that isn’t to say that we didn’t have worries about it. I was worried about it. And I’d raised those worries over the weeks and indeed, months beforehand, because I knew what an important question this was. But, you know, the countervailing global scientific consensus was that no Coronavirus before had been passed on asymptomatically. And so it couldn’t be. And that turned out to be wrong. So, you know, the most important thing having been through it and me having been in the hot seat is just to make sure we learn the lessons and learn the right lessons. But you know, you can I know people, you know, they say, Well, Chris, would he said this to the select committee or they’d say, But James Bethel said this to the House of Lords. But, but the honest truth is, of course, we were worried about this, and we will ask them questions about it. The court finding was specifically that the wasn’t an analysis of this in the advice that was put to me about that guidance. And that’s what it found. Charlie Conchie 29:53 And how I suppose coming back to the point on your previous roles, how Secretary Yeah, is there a contradiction? Do you think in the fact that you were found to have broken the rules and you did resign from your post and the Prime Minister’s decision not to have resigned from his well […]