Giving crypto the ministerial seal of approval comes with responsibilities

As Rishi Sunak is finding out, value can be volatile. Last year he was the odds-on favourite to replace Boris Johnson in Number Ten, popular with Tory party members and (for a Cabinet minister, at least) the public at large. Alas this year, though Sunak has done very little differently, his stock isn’t quite flying so high. A poll by ConservativeHome of party members had him languishing near the bottom in a Cabinet popularity contest (imagine how that feels!) and the press are giving him a going-over for a perceived lack of action on the cost of living crisis.

Perhaps inspired by this wild unpredictability, the Chancellor has turned his attention to cryptocurrencies and digital assets. Much like political popularity the value of both can fluctuate massively on precious little tangible change. So it’s an almighty risk the Treasury is taking to stand four-square behind them.

The full-throated support of these new tools is not in and of itself a bad thing; risk-taking and innovation are at the heart of the City’s post-Brexit future. But that doesn’t mean blind risk. Yesterday, on the same day the Treasury nailed its colours to the crypto mast, Bank of England governor Andrew Bailey was warning it was the next frontier for fraud. His respected colleague Sir Jon Cunliffe has warned at length that the space has become a wild west. The Financial Conduct Authority has been cajoling government to give it the ability to put more consumer protections in place.

There is every chance that yesterday’s announcements, not least the arrival of a Treasury non-fungible token, are more window dressing than substantial policy announcement. If so, and it’s designed to signal openness to new ideas and exciting new assets, then all to the good.

But a marketplace currently synonymous with fraud, manipulation and opacity has just been given quite the endorsement. Let’s hope it doesn’t come back to bite.