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A British Member of Parliament is more bullish on Ethereum than Bitcoin and has called on the government to let people experiment with crypto.
Tom Tugendhat, MP for Tonbridge and Malling, devoted precious time in a speech of “Affordable and Safe Housing For Fall” on Wednesday to share his prediction that Ethereum will “flip” the market capitalization of Bitcoin.
Bitcoin, the world’s largest cryptocurrency, has a market cap of $758 billion. Ethereum, the second-largest, has a market cap of $310 billion.
We need to think about the contracts and currencies that will shape future trade and risk sharing. We’re seeing the flippening from #Bitcoin to #Ether and we need @hmtreasury to help create space for UK innovation and our legal system to learn what’s needed in a new economy. pic.twitter.com/vUN0rxbW1W
— Tom Tugendhat (@TomTugendhat) May 20, 2021
Tugendhat yielded no more information: “I’m not going to go in the few moments left of the flippening and why I am going to be bullish on Ether and not Bitcoin, or the nature of the change in the Treasury that is needed to enable innovation that sees the sharing of prosperity on a global basis rather than a local one.”
“We need to think about the contracts and currencies that will shape future trade and risk sharing,” he tweeted yesterday to his 60,000 followers, most likely referring to smart contracts—self-enforcing blockchain scripts that facilitate decentralized financial services.
Tugendhat’s comments are a sharp left turn from Parliament’s agenda on Wednesday. Tudenhat gave his speech during the “Affordable and Safe Housing for All” session, named after a new government policy that the Queen announced in her speech on May 11.
But MPs often talk about matters beyond the scope of the scheduled parliamentary session. Tugendhat made the transition from affordable housing to crypto through an analogy about the reconstruction of the Houses of Parliament after a fire in the 19th century.
“The fire that started with the tally sticks destroyed not just an old Parliament but an old world,” he said. “It brought about a new innovation in currency and a change in our economic future. It removed the restrictions that for many had held back our economy.”
Then came a hop, skip and a huge jump to crypto.
Tugendhat said that the government should turn its attention to crypto: “This is a time when we need to talk again about those changes, because the Queen’s Speech does not cover the changing nature of currency, the changing nature of the economy, and the innovations that we are seeing online through various forms of cryptocurrencies.”
More on crypto
Tugendhat didn’t have the time to cover everything. To fill in the gaps, he uploaded an extended speech to Soundcloud yesterday.
“Over the next few years, I’m going to be urging the Treasury to create a box into which people can experiment with cryptocurrencies and crypto contracts,” he said, “and see if it can find ways in which to allow innovation and to regulate later.”
Tugendhat is speaking about a regulatory sandbox, a period when the government allows for a degree of experimentation under strict supervision.
“Now, clearly there’ll be huge risks in the space and it won’t be for everybody—it will be for very, very adventurous people who are looking for opportunities to grow,” he said. “But if the government doesn’t allow that to happen, then the danger is the UK will be left out of the crypto innovation.”
The Financial Conduct Authority has maintained a regulatory sandbox for fintech companies since 2015. In 2018, the regulator admitted 12 blockchain companies. In 2019, a further seven blockchain companies joined the sandbox, and eight more joined in 2020.
However, the companies admitted are more buttoned-up than the complex, unregulated derivatives products that Ethereum popularized last year.
Tugendhat said that if the Queen were to talk about blockchain, it would provide people with the confidence to wade through crypto’s muddy waters.
Backbenchers and crypto
Tugendhat is a Tory backbencher; he’s a member of the ruling Conservative Party but holds no official position within the government. Backbenchers often take a critical stance toward the policy positions of the government, even if their party is in power.
Steve Baker, another Tory backbencher, recently told Decrypt that, "in a hypothetical world, I would expect a market economy to choose commodity money in the future as it has in the past." He’s convinced that the most likely candidate in the future is one that’s "enabled by technology," if not Bitcoin itself.
In his testimonial for Dominic Frisby’s 2015 book, Bitcoin: The future of money?, Baker said, “Despite having an MSc in Computer Science and spending over ten years studying monetary theory, I ignored Bitcoin as hype for too long. You shouldn't.”
Whether Her Majesty follows the backbencher’s advice will become clear in her next speech.