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Great Britain: why the national digital currency was cancelled or back-to-back sabotage of power and business

Oleg Koldayev

The Royal Mint of Great Britain officially froze the project to issue the national digital currency Royal Mint Gold. Previously, it was assumed that with the help of virtual assets financial authorities would be able to add additional liquidity to the state gold reserve stock. But everything ended joylessly: the English Treasury was let down by business partners, the network of American crypto-exchanges CME. At least, the treasurers declared this reason as official. But there are others.

They started speaking about the British stablecoin for the first time back in 2016. In the fall of 2017, the coin should have appeared on the market. However, neither in autumn nor in winter did the investors see it. Then the launch date was postponed to the beginning of 2018. And again, no news.

Only at the end of October, a source in the Royal Mint, in keeping with the best traditions of English conspiracy, reported that because of the market conditions, the release of virtual currency was not possible, but, they said, they promised to come back to that project as soon as conditions became suitable. In other words, when the fog over London clears away.

After all, $1 billion or 25 tons of gold from the 310 available in the royal cellars were on the line.

Of course, Great Britain is not the United States with its 8 thousand tons of precious metal, and not even Germany with its three thousand. In terms of volume of gold reserves, Foggy Albion is only 15th in the world. Nevertheless, the freezing of the crypto project by the British Treasury deprived the digital economy of a very significant precedent. The Royal Mint has been existing for 1100 years; the very fact that tokens were issued by a structure with a thousand-year tradition could be a signal to legislators and monetary authorities around the world to adopt virtual currencies as an integral part of the global financial market. However, the signal was not given. And there are two reasons for this dead end.

The first one is that the partnership with the network of American crypto-exchanges CME has collapsed. According to the Treasury plan, the English token was supposed to be traded on American platforms, since there is not a scintilla of legal support for digital financial institutions in Great Britain.

England cannot impress by effective judicial practice in the digital sphere since the judicial bodies have not created any significant precedents or clear, legally binding definitions on cases of virtual assets. The American market seemed to officials to be more controlled: in the United States, one way or another, the principle of KYC operates, the observance of which is controlled by the SEC.

Moreover, the question of creating a complete regulatory framework for this sector of the economy has been repeatedly taken up in Great Britain both at the level of legislative power and at the level of the business community. But these attempts are best characterized by one phrase: “the numb-head approach to the instrument.” This is how the British Business Federation Authority (BBFA) and Novum Insights venture fund, and TodaQ cryptocurrency exchange, which, among many others, stand against the attempts to legally raise the powers of the Financial Conduct Authority (FCA) in the digital market to a dictatorial level, formulated the problem in the joint report.

“It is a very numb-head approach to the instrument and I haven’t observed this on other countries, - the Executive Director of BBFA Patrick CURRIE said. – The use of this technology is still a way of discoveries, and these technologies are improved for different ways of using. I am worried about the rule of unforeseen consequences.”

According to experts, the absence of regulation is better than bad laws, since they constitute the risk of losing the confidence of market participants in the entire financial system. But the authorities are afraid to give freedom to business. Excessive will, as we will see, constitutes unforeseen political risks. Therefore, the creation of the necessary legislative base is sabotaged, either by business or by the state.

Such a stalemate legal situation could lead to strange consequences for Great Britain, when its monetary units, even if they were virtual, would initially appear on the US market. And American financial institutions would manage them. The political consequences here are quite transparent, this is called colonial dependence, and it is surprising that the situation in 1778 could have been mirrored this way in 2018. Could the British agree with that?

The second reason lies deeper. The best of all would be to describe it with the words of a well-known investor, writer, and crypto-enthusiast Andreas ANTANOPOULOS. He believes that digital currencies can explode the power of governments, the traditional financial system and significantly narrow the horizon of opportunities for all sorts of corrupt officials: “At the moment, cryptocurrencies are considered a means of avoiding traditional financial schemes and some kind of a calm harbor, a vault area. The use of the bitcoin by people aiming to withdraw their assets from the strict supervision of the state, appropriating the money of its citizens by any means, will become  catalysts of future changes.”

In fact, the expert described the phenomenon that political scientists around the world have already designated with the pretty much English term - “BREXIT Effect”. It consists in the fact that the confidence of the population in the national elites and their derivatives - the political, economic, and financial systems - is collapsing. And as a result, there is a rejection of generally accepted conventions and a shift in political preferences towards marginal opposition parties, and in economic ones - towards non traditional financial assets.

Perhaps, the leap in popularity of virtual currencies in 2017 is associated exactly with this trend. It can be said that the refusal of Britain to create its own digital coin illustrates the awareness of politicians and financial authorities of the entire depth of the problem, as well as their unwillingness to multiply entities without the necessity (Occam's razor).

As a result, the Royal Mind Gold project was postponed without the date. We assume that forever. On the one hand, British politicians must not give control over their country's assets to another state — to the United States in this case. On the other hand, the introduction of its own digital coin can become the first step toward loosening control over the financial system, which has been forming for centuries. Here, apparently, is the case when tradition and modernity are in contradiction. The British Crown has always acted as a guarantor of the financial stability of its subjects, but the digital economy does not accept centralization and immanent principles, even if power itself takes part in its development. In current conditions, the decision will be made by the market, not the government or the Queen. English politicians are not ready to put up with this yet.

This time, Great Britain demonstrates to the global market the example of the reasonable predicaments on the way to introduce state virtual currencies in developed traditional economies. And no matter what a majestic figure makes loud statements: if the political and economic infrastructure is not ready for the implementation of ambitious plans, any national projects will turn into a scam.

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