This is the opinion editor of YouTuber and writer Jacob Kozhipatt.
The phrase “October surprise” is used in politics to describe a last-minute, paradigm-shifting event that occurs a month before the American election. For example, in 2016, the FBI reopened its investigation into Hillary Clinton’s private email server, which many argue contributed to her loss in the 2020 election. In 2020, then-President Donald Trump contracted COVID-19 just weeks before the November election.
Bitcoin markets need a shake-up. 2022 has been a difficult year for the price of bitcoin. Right now, bitcoin sits ~65% below its price just a year ago, a far cry from the six-figure price forecast predicted by models like stock-to-flow and long-term bulls like Tim Draper.
Some are hoping that the appointment of Rishi Sunak, the UK’s new prime minister for cryptocurrency, could be a major positive change. Considered by many to be an ally of innovation, Sunak declared a year ago that he wanted the UK to become a “global hub for crypto-asset technology”.
Could the election of Rishi Sunak be the ‘October Surprise’ needed to propel Bitcoin forward?
Bitcoin Regulation in 2022
One of the most important questions about Bitcoin is: How should governments regulate it?
So far, the US is a mixed bag. While some lawmakers — like Sen. Cynthia Lummis — are pushing for bitcoin-friendly regulation, others, like Sen. Elizabeth Warren, are pushing for more critical legislation.
Although the US federal government’s perspective on bitcoin is currently being debated, many states already have anti-bitcoin laws in place. For example, New York, the financial capital of the United States, has the strictest regulations against cryptocurrency thanks to the BitLicense. The existence of BitLicense means that bitcoin enthusiasts are prevented from participating in many innovations. Even mayor-elect Eric Adams had to turn to alternative, more expensive means to pay his first three months’ salary in bitcoin.
Many investors, such as Shark Tanks’ Kevin O’Leary, argue that this regulatory uncertainty has caused many to flee the space. Sunak could have been a game changer.
Why is Rishi Sunak good for Bitcoin?
New UK Prime Minister Rishi Sunak may be seen as an ally for bitcoin. Sunak’s youth and Stanford pedigree make him feel open to new technologies, especially ones as lucrative as bitcoin. As Finance Minister, Sunak pushed for substantive pro-cryptocurrency legislation. He supported the “Financial Services and Markets Bill,” which according to Coindesk is widely seen as crypto-friendly as it boosts the adoption of stablecoins.
Moreover, there are competitive advantages for Sunak involving cryptocurrency. America’s established laws, combined with uncertainty about future laws, mean many in the world’s largest English-speaking country are looking for alternatives. This is where England can capitalize.
The Bitcoin community is digitally nomadic – as seen in the migration of enthusiasts to places like Malta and Portugal. If Sunak created an incentive for bitcoin companies to move to places like London, it could drive capital and talent away from America.
Finally, with the United Kingdom’s growing deficit problem, the nation desperately needs out-of-the-box solutions. Nothing could be more out of the box than Sunak making London the bitcoin capital of the world.
Why Rishi Sunak Could Be Bad For Bitcoin?
While many Bitcoin fans are excited for Sunak’s leadership, some express concerns about the authenticity of his support for the cryptocurrency.
Many point out that Sunak’s wealth and generational education make him part of the “establishment” and inherently opposed to the rebellious and alternative nature of bitcoin. Prominent YouTuber Wendy O compared him to SEC Chairman Gary Gensler. Gensler, who teaches courses on digital currencies at MIT, initially appeared to be a proponent of cryptocurrency. However, since his appointment, Gensler has frequently criticized the venue and called for increased investor protections.
Sunak’s support for central bank digital currencies (CBDCs) also worries Bitcoiners. People like Matthew Cratter of the popular show Trader University argue that CBDCs symbolize everything that is wrong with government money. For Kratter, CBDCs are inherently centralized and encourage government control of individuals’ finances — something many bitcoiners see as directly at odds with bitcoin’s ideals. Kratter went so far as to call Sunak’s vision for a UK CBDC a “spy”.
Will the price of Bitcoin go up?
Sunak came into office at a time of unprecedented financial difficulty in the UK. With ever increasing deficits, a weakening pound, a housing crisis and a widening wealth gap, it’s safe to assume that bitcoin and cryptocurrency are not high on the agenda.
While we can’t predict his relationship with bitcoin, it’s worth noting that just the idea of a pro-bitcoin prime minister is enough to drive the price of the asset higher.
At this early stage, it’s impossible to predict how Sunak will directly affect the price of bitcoin, but his track record now suggests he’s an ally of the often-maligned industry.
This is a guest post by Jacob Kozhipatt. The opinions expressed are entirely their own and those of BTC Inc. or Bitcoin magazine.