Rishi Sunak’s continued enthusiasm for crypto industry prompts questions from transparency campaigners
Campaigners have questioned whether Rishi Sunak has ‘swalloed the crypto Kool-aid’
Campaigners have said Number 10’s refusal to say whether the Prime Minister has ever invested in the crypto sector “raises red flags,” because most advocates of the industry “tend to be heavily invested”.
The government has pushed ahead with plans to turn the UK into a ‘global hub’ for crypto, despite the industry being beset with major issues, including warnings from the Financial Conduct Authority, US regulators bringing a raft of charges against two of the sector’s leading firms.
Rishi Sunak has long been an enthusiastic backer of crypto and related technologies, most recently endorsing a company which he met with as Chancellor after it announced plans to open an office in London. NationalWorld has previously revealed that Andrew Griffith, the minister leading the government’s efforts on regulating crypto, has a financial interest in the sector.
The Prime Minister is understood to have a valuable investment portfolio which has been managed in a “blind trust” arrangement since he took ministerial office, but experts have raised concerns about these trusts, saying they “potentially enable individuals to maintain access to information about their interests”.
Sunak has often been heralded as the UK’s most tech-savvy Prime Minister to date, and has strong links to Silicon Valley, the US hub for tech companies which has had an increasing focus on disruptive technologies such as blockchain and crypto in recent years.
The PM is likely the richest person to ever hold the keys to Number 10, with wife Akshata Murthy heiress to a multi-billion dollar IT empire. But Sunak is also independently wealthy following a career in finance – he worked at Goldman Sachs and later as a hedge funder at Theleme Partners. One of Theleme’s directors sits on the board of UK-based blockchain company, ByzGen, which lists the Ministry of Defence as a client on its website.
Sunak has faced questions throughout his time as a senior minister over his investment portfolio, which has been placed in a blind trust since he took office, meaning he has no influence over investment decisions.
Asked by NationalWorld whether the Prime Minister’s US-based investment fund had any stake in the crypto sector when it was last under his control, Number 10 declined to comment.
The government’s continued enthusiasm for the sector in the face of significant setbacks and differing regulatory approaches elsewhere, particularly in the US, has prompted questions from campaigners.
Simon Youel, policy director at Positive Money, said: “Rishi Sunak does appear to have been overly enthusiastic about crypto, despite the industry offering very little other than huge losses for investors.
“It may be that he has just swallowed the cryptobro Kool-aid, but unsurprisingly most advocates of cryptoassets tend to be heavily invested in them. As Prime Minister, Sunak should be transparent about his investments - his unwillingness to disclose raises red flags.”
The practice of blind trusts has been criticised. Experts point out that ministers will have known the nature of their investments before setting up the blind trust arrangement, and highlight a general lack of enforcement mechanisms.
Daniel Beizsley, research consultant at Spotlight on Corruption, said: "Blind trust arrangements are touted as a solution to mitigate conflict of interest risks, but in practice they result in a lack of transparency, particularly when ministers and MPs are no longer required to declare their financial interests on official registers.
“The blind trust system relies heavily on self-disclosure and lacks effective monitoring or enforcement mechanisms, potentially enabling individuals to maintain access to information about their interests without proper scrutiny or accountability."
Sunak endorses major crypto investor
Rishi Sunak met with tech-focused investment firm Andreessen Horowitz - also known as ‘a16z’ - twice in December 2021 – first in a one-on-one meeting to discuss “UK and global technology issues and opportunities,” then as part of a roundtable with the crypto industry, alongside other companies.
The firm later took part in a further industry roundtable in November 2022 with Griffith,, who is leading the government’s efforts to develop the crypto sector. He also has a financial stake in a company with investments in the crypto and Web3 sector - the name given to products and services linked to Blockchain technology, of which crypto assets are a major part.
Last month, after US-based a16z announced it would open its first overseas office in London, with further plans for a “crypto startup school” in 2024, Sunak shared his support for the venture on Twitter, prompting a wave of positive reactions from crypto enthusiasts.
The US in particular has embarked on a major crackdown on crypto companies in the last 12 months, with charges brought by the Securities and Exchange Commission (SEC) against two of the industry’s leading firms, Binance and Coinbase. Both companies have been involved with lobbying the UK government in recent years. A16z was an early investor in Coinbase.
As well as tweeting about the news, Sunak provided a comment for a16z’s press release, describing it as a “world-leading investor”, and stating his determination to “unlock opportunities” for blockchain and crypto technology, “and turn the UK into the world’s Web3 centre”.
Kathryn Westmore, senior research fellow at The Royal United Services Institute, described the UK’s regulatory approach to crypto as “one of collaboration between policy makers and the industry” which is very different to the US, and said the UK had not followed the recommendations of a recent report by MPs.
She said: “The approach that the UK has taken seems to have been welcomed by the industry; the Treasury Select Committee’s recent report which suggested a different model of regulation, treating crypto in the same way as gambling, was widely rejected by the industry.”
Westmore also stressed the need for robust regulation, given the potentially harmful applications for crypto technologies.
She added: “While the percentage of illicit activity is minimal when looking at the overall crypto transaction activity, appropriate safeguards need to be put in place to restrict heightened abuse. There is clear evidence of the malicious uses of crypto from hacks carried out by persistent state actors, laundering of funds by organised crime groups, and an abundance of scams relating to crypto-assets.”
The government has also faced extensive criticism about a lack of transparency over meetings with lobbyists and private companies – particularly in controversial sectors such as crypto where relevant ministers may have financial interests, and where regulatory frameworks are being developed.
Rose Whiffen, Transparency International UK, said: “In an emerging sector, where regulation is still developing, it is essential that the public know which private companies have the ear of ministers and crucially, what they are discussing.
“Unfortunately, Westminster’s lobbying system still remains woefully opaque with records often ambiguously labelled, leaving the public unable to understand what really goes on behind closed doors. To ensure greater transparency, the government should introduce a more comprehensive lobbying register, similar to the Canadian model, which publishes the legislation that registrants want to influence and their objectives.”
A government spokesperson said: “We are committed to creating a regulatory environment which balances innovation with financial stability and clear standards – so people and businesses can invest in crypto assets safely and reliably, and with an understanding of the often high risks involved.”