Lisa Gordon, the chair of Cavendish Investment Bank, has put forward a bold proposal to tax cryptocurrencies, aiming to channel more investment into UK equities and stimulate economic growth.
Gordon suggests a tax shift that could see the current stamp duty on equities either transferred to cryptocurrencies or reduced, in order to bolster investments in local businesses.
In the UK, a 0.5% stamp duty is levied on all stock purchases on the London Stock Exchange, generating approximately £3 billion annually for the government.
By shifting this duty from equities to cryptocurrencies, Gordon believes it could encourage more UK citizens to invest in shares of local companies, potentially enhancing economic expansion.
Gordon is particularly concerned about the demographic under 45 years of age, over half of whom own cryptocurrencies but do not hold equities.
She labels cryptocurrencies as “non-productive assets” in contrast to equities, which not only provide essential capital to businesses but also create jobs and contribute to government revenue through taxes.
She argues that boosting local stock ownership could reinvigorate the British stock market and contribute to long-term economic stability by creating jobs, supporting corporate innovation, and increasing tax revenues.
According to the Financial Conduct Authority (FCA), around 12% of the UK adult population, or 7 million people, currently own cryptocurrencies, with a significant portion of digital asset owners being under the age of 45. Gordon suggests that many cryptocurrency investors lack effective investment strategies that would safeguard their financial future.
The FCA’s findings also indicate a disparity between savings and investments, particularly among younger adults, with 70% holding savings accounts yet only 38% having direct or indirect ownership of stocks.
Recent increases in living costs have led many to scale back on their investment and savings efforts, with 44% of adults reducing or halting such activities and nearly a quarter withdrawing funds from savings or selling investments due to daily expenses.
Gordon’s strategy forms part of a broader effort by the Capital Markets Industry Taskforce to rejuvenate the UK stock market, which has seen a decline in new listings and an exodus of companies either delisting or relocating to US exchanges.
This trend, attributed by EY to reduced liquidity and lower valuations, contrasts with Gordon’s view of the UK as offering a more secure investment environment compared to the US.
Amid a downturn in the digital asset market, with Bitcoin’s value falling 11% last month and struggling to maintain support above $85,000, Gordon’s proposal for cryptocurrency taxation aims to redirect these investments back into the stock market and thereby boost the UK’s economic growth.
