The spectacular collapse of the FTX platform in November and the long wait for founder Sam Bankman-Fried’s trial continue to cast a shadow over digital financial assets that has scared off US lawmakers and regulators from creating long-term robust infrastructure for the industry.
That does not mean that innovation in the sector is not proceeding at pace. Former Chancellor Lord Hammond, who now chairs the London-based digital asset custody firm Copper, believes it is only a matter of time — probably next year — before digital trading in tokenised “real world” assets such as debt, equities and real estate begins on a small pilot scale.
This creates both an opportunity and a threat to London. While the initial moves are likely to made in financial centres such as Dubai, Singapore or Abu Dhabi, there is a chance for the capital to grab global leadership.
But Lord Hammond warns that the City’s window of opportunity is slipping away. Rishi Sunak has been an avid proponent of all things crypto and his Economic Secretary John Glen assured delegates at a global summit last year that “we — the UK — want to be in, and in on the ground floor”.
But are the warm words being matched by timely development of the regulatory and trading architecture needed to bring crypto trading to London as the sector matures from its early “Wild West” phase?
The City cannot afford to miss out if and when crypto trading goes mainstream.