Despite Rishi Sunak's efforts, Britcoin is destined to fail

Liz Truss' sudden departure threatened the UK's reputation as a crypto-friendly nation. The new PM, Rishi Sunak, a crypto-bro who is only half-jokingly described as a "crypto-bro", has reignited the hopes of crypto advocates.

According to reports, Sunak will now try to fulfill the promises he made as chancellor in April. As part of these initiatives, a “financial market infrastructure sandbox” will be created, a “Cryptoasset Engagement Group” will be formed, and stablecoins will be allowed to be used as a form of payment. By doing so, Britain will be able to maintain its leadership in financial innovation globally.

As a pioneer in this field, the UK has a long history. Midland created the first "Eurodollar" trade in the mid-1950s, an attempt to avoid regulation by sending US dollars overseas. Midland developed a shadow currency system using Eurodollars to avoid UK capital controls on the pound. Despite its limitations, cryptocurrency is simply an application of regulatory arbitrage in the modern age.

It's likely Sunak's favorable position on CBDCs will come under increased scrutiny in the coming weeks since searches worldwide for "CBDC" have quadrupled since last month. Despite having no concrete relationship with cryptocurrencies, central bank digital currencies are often grouped with cryptocurrencies. The UK government concurs with the research that establishes the two as distinct. Britcoin appears not to use crypto-related technologies.

If Britain decides to build it, that is. CBDC plans in the UK remain vague, as with crypto narratives such as Web3. Many developed nations have issued press releases stating they are "investigating", "looking into what it might mean" or recommending further research to determine the precise use of CBDCs.

Developing nations like the UK, which already possess world-class infrastructure, have no reason to deploy a central bank digital currency, other than to replace an absent payments infrastructure, as the CBDC will do in Jamaica.

In the face of much uncertainty, why is Britain pursuing a CBDC? The only "innovative" use of CBDCs seems to be to restrict freedoms and privacy for citizens in autocracies because only China is implemented a full-fledged CBDC codenamed "DC/EP". The positive attitude Rishi Sunak has toward CBDCs will likely backfire once UK citizens realize this.