Lisa Gordon, the Chair of Cavendish Investment Bank, has expressed concern over the rising popularity of cryptocurrencies in the UK, especially among younger generations. She pointed out that more than half of individuals under the age of 45 now own digital currencies, but many of them do not hold any traditional stock investments. Gordon believes that this growing shift towards crypto assets could have negative implications for both personal wealth and the broader economy, with potentially long-lasting consequences.

The Role of Stocks in Economic Growth

Gordon emphasized the crucial role stocks play in economic development. Unlike cryptocurrencies, which she views as speculative and non-productive, stocks serve as an essential mechanism for financing businesses. This process enables companies to innovate, expand, and create jobs, all of which contribute to the overall economic health of a country. Gordon argues that stocks are integral to the functioning of the real economy. She further explains that investments in stocks directly support the creation of tangible economic value, in contrast to cryptocurrencies, which, while potentially offering quick profits, do not foster any real-world productivity or economic benefits.

Gordon’s concerns stem from the fact that a growing interest in crypto may divert attention and capital away from traditional stock markets. While crypto assets may seem appealing to younger investors, especially due to their high volatility and potential for rapid returns, they fail to support industries and businesses that contribute to long-term growth and development. Gordon warns that a lack of stock market investment could stunt overall economic progress and harm individuals’ ability to build wealth over time.

Tax Reform to Encourage Stock Investments

To address these concerns, Gordon has proposed reforms aimed at reinvigorating investment in the stock market. She has called for a reduction in the 0.5% stamp duty on London-listed stocks, a measure she believes would help reignite investor interest in traditional financial markets. Additionally, she suggests imposing a tax on cryptocurrency transactions similar to the stamp duty on stocks, which would ensure that crypto assets contribute to the financial ecosystem in the same way that stocks and other traditional assets do.

This approach, according to Gordon, would help balance the playing field between cryptocurrencies and traditional investments. By creating an incentive for more people to invest in stocks, she believes the UK could experience economic growth through higher levels of business funding, job creation, and innovation. At the same time, Gordon stresses the importance of creating a financial environment where both traditional and digital assets can coexist in a way that supports long-term economic stability.

The Urgency for Action

As a member of the Capital Markets Industry Taskforce, Gordon is urging the UK government to act swiftly in addressing the current trends. While acknowledging the difficulties faced by the market, she remains optimistic about the UK’s position as a global financial hub. Gordon believes that enhancing public understanding of capital markets and implementing favorable policies for both traditional and tokenized assets will help revitalize the UK’s investment landscape. By doing so, she believes that London can continue to compete as a leading global financial center.

The Decline of UK Stock Market Activity

Recent reports have shown a troubling decline in investment activity in the UK stock market. In 2022, only 18 companies were listed on the London Stock Exchange, a sharp contrast to the 88 companies that either delisted or moved to other financial centers. This decline in listings raises questions about the future of the London Stock Exchange and the UK’s attractiveness as a destination for capital. Gordon’s call for tax reform and renewed investment in traditional assets is an effort to reverse these trends and ensure that the UK remains a vital player in the global financial ecosystem.

In conclusion, Gordon’s call for tax reforms aimed at cryptocurrencies highlights a critical need for balanced economic policies that promote both traditional stock investments and the emerging digital asset markets. Her vision is one where the UK can foster sustainable growth through a mix of innovative, yet grounded, investment strategies.