UK Urged to Tax Crypto to Encourage Investment in Local Stocks

According to Cointelegraph, the United Kingdom is being advised to implement taxes on cryptocurrency purchases to encourage citizens to invest in local stocks, a move that could potentially bolster the nation's economy. Lisa Gordon, chair of investment bank Cavendish, expressed concerns over the growing trend of younger Britons investing in cryptocurrencies rather than equities. In a report by The Times on March 23, Gordon stated, "It should terrify all of us that over half of under-45s own crypto and no equities." She suggested that reducing stamp duty on equities while applying it to cryptocurrencies could redirect investments towards local companies. Currently, the UK imposes a 0.5% tax on shares listed on the London Stock Exchange, generating approximately 3 billion British pounds ($3.9 billion) annually in tax revenue. Gordon believes that cutting this tax could incentivize individuals to invest their savings in local company shares, potentially encouraging more firms to go public in the UK and stimulating economic growth. She criticized cryptocurrencies as "non-productive assets" that do not contribute to the economy, contrasting them with equities that provide growth capital to companies, create jobs, and generate corporate tax revenue. This, she argued, forms a social contract that should be advocated. The Financial Conduct Authority (FCA) reported in November that cryptocurrency ownership in the UK had risen to 12% of adults, equating to around 7 million people, with a significant portion under the age of 55. Gordon noted a shift towards saving rather than investing, which she argued is insufficient for securing a viable retirement. A 2022 FCA survey revealed that while 70% of adults had a savings account, only 38% held shares directly or through tax-advantaged accounts. Furthermore, a follow-up survey indicated that the cost of living crisis led 44% of adults to either stop or reduce saving or investing, with nearly a quarter using savings or selling investments to cover daily expenses. Gordon is part of the Capital Markets Industry Taskforce, a group of industry leaders aiming to rejuvenate the local market, which would benefit Cavendish as it advises companies on potential public offerings. Consulting firm EY reported that the London stock market experienced one of its quietest years on record, with only 18 companies listing in the previous year, down from 23 in 2023. Additionally, 88 companies delisted or transferred from the exchange, citing declining liquidity and lower valuations compared to other markets like the US. Despite these challenges, Gordon asserted that the UK remains a "safe haven" compared to the US, which has faced significant stock market losses due to U.S. President Donald Trump's tariff threats and recession fears. Meanwhile, the cryptocurrency market has also faced downturns, with Bitcoin struggling to maintain support above $85,000, although it saw a slight increase of 2% in the past 24 hours, trading around $85,640.