UK Banker Proposes Crypto Tax to Boost Stock Market Investment

TLDR

• UK investment banker Lisa Gordon proposes taxing crypto purchases while cutting taxes on stock investments
• Currently, the UK taxes shares on the London Stock Exchange at 0.5%
• Over half of UK adults under 45 own crypto but no equities
• Gordon argues stocks support the economy while crypto is “non-productive”
• UK stock market listings declined to just 18 companies in 2023, while 88 companies delisted

A top UK investment banker has called for taxes on cryptocurrency purchases to help direct more investment into the stock market. Lisa Gordon, chair of investment bank Cavendish, believes such a move could boost the UK economy.

Gordon told The Times on March 23 that the high rate of crypto ownership among younger Britons compared to stock ownership is concerning. “It should terrify all of us that over half of under-45s own crypto and no equities,” she said.

The banker suggested a policy shift that would reduce the existing tax burden on stock purchases while creating a new tax on cryptocurrency transactions. “I would love to see stamp duty cut on equities and applied to crypto,” Gordon stated.

Currently, the UK government charges a 0.5% tax on shares listed on the London Stock Exchange. This tax brings in around 3 billion British pounds ($3.9 billion) in yearly revenue for the government.

Gordon believes reducing this tax could encourage more Britons to invest in shares of local companies. This shift could then motivate more companies to list on UK exchanges, creating a positive cycle for the economy.

In contrast to stocks, Gordon describes cryptocurrency as “a non-productive asset” that “doesn’t feed back into the economy.” Her comments highlight a view that traditional investments provide more economic benefits than digital assets.

“Equities provide growth capital to companies that employ people, innovate and pay corporation tax. That is a social contract. We shouldn’t be afraid of advocating for that,” Gordon explained.

Investment Trends Shifting in UK

Crypto ownership in the UK has been growing. The Financial Conduct Authority (FCA) reported in November that about 12% of UK adults now own cryptocurrency, equal to around 7 million people.

The data shows that most crypto owners in the UK are under 55 years old. This age group makes up about 36% of all crypto holders in the country.

Gordon expressed worry that many Britons have “shifted to saving rather than investing.” She warned this trend “is not going to fund a viable retirement” for many people.

A 2022 FCA survey found that while 70% of UK adults had savings accounts, only 38% owned shares either directly or through investment accounts. The survey revealed nearly three in four 18-24 year olds held no investments at all.

These investment patterns exist despite UK policies that allow nearly 20,000 British pounds ($26,000) of tax-free savings per year. Only a quarter of 18-25 year olds and a third of 25-44 year olds held any investments in 2022, according to FCA data.

Recent economic challenges have made the situation worse. In the 12 months leading to January 2024, the cost of living crisis caused 44% of all adults to either stop or reduce their saving or investing activities.

Nearly a quarter of UK adults reported using their savings or selling investments just to cover day-to-day expenses during this period. This trend further reduces market participation among regular citizens.

Gordon serves on the Capital Markets Industry Taskforce, a group of industry executives working to revive the UK’s financial markets. Her bank, Cavendish, would benefit from a stronger market as it advises companies on public offerings.

The London stock market has struggled recently. Consulting firm EY reported that 2023 was one of the “quietest years on record” for the exchange, with just 18 new company listings, down from 23 in 2022.

At the same time, 88 companies either delisted or transferred from the London exchange. Many cited “declining liquidity and lower valuations compared to other markets” such as the US as reasons for leaving.

Despite these challenges, Gordon claimed the UK remains a “safe haven” compared to markets like the US. American markets have lost trillions of dollars due to President Donald Trump’s tariff threats and recession fears.

Cryptocurrency markets have also struggled recently. Bitcoin has dropped 11% over the past 30 days and has had trouble staying above $85,000 since early March.

The most recent data shows Bitcoin trading at around $85,640, up 2% in the past 24 hours.