ALEX BRUMMER: Former finance ministers shouldn’t meddle with crypto

Former Chancellors are making headlines. George Osborne has attracted attention for efforts to seal a deal with Athens over the Elgin marbles. 

Nadhim Zahawi is under investigation for the handling of his tax affairs. Gordon Brown wrote a recent report on constitutional reform for Labour leader Keir Starmer.

And Philip Hammond is under the spotlight over a decision to take on the chairmanship of Swiss-based crypto currency start-up firm Copper.

Crypto job: Former chancellor Philip Hammond is under the spotlight over his decision to take on the chairmanship of Swiss-based crypto currency start-up firm Copper

He has declared a ‘small stake’. Hammond is in good company, since investors include Barclays and billionaire hedge fund entrepreneur Alan Howard.

Hammond says the firm based itself in Switzerland because the UK regulator, the Financial Conduct Authority (FCA) , has been slow to approve registration.

He fears the UK is in danger of losing out to Europe and other centres in the fintech-crypto space because of its caution.

Maybe. But a timely report from the Treasury Select Committee suggests there is good reason to keep the brakes on. 

Some 85 per cent of crypto firms who applied to the FCA for some kind of registration were unable to demonstrate they have the systems and standards under its anti-money laundering and counter terrorism financing laws.

It found key personnel lacked the knowledge, skills and experience to carry out their roles and controls effectively.

No one will doubt that Hammond, an effective Chancellor who kept the public finances on a sound footing, will bring all kinds of governance and judgement skills to his new job. More questionable, however, is the whole credibility of crypto. 

From the mysteries and power consumption of bitcoin mining to the alleged fraud at FTX and bankruptcies in the industry, its credentials have been seriously undermined.

Crypto firms have much to teach traditional finance. The blockchain or distributed ledger is widely praised.

Nevertheless, the transparency it is said to provide failed to save the day at FTX and offered new opportunity for hiding stuff.

As matters stand, the bitcoin and crypto markets are highly volatile and an unsafe space. After falling 60 per cent last year, bitcoin has surged nearly 40 per cent in 2023 and some crypto exchange traded funds (ETFs) have jumped more than 80 per cent. Crypto is a market for speculators and rogues.

The FCA is right to give it the cold shoulder. Banks and hedge funds can afford the odd side bet but former finance ministers need to preserve their greatest asset.

There is nothing more important than a good name.

Down the hatch

Under the leadership of Ivan Menezes, Diageo has been transformed.

North America is the star with the share of the spirits market climbing from 36 per cent pre-pandemic to 44 per cent now, a performance the taciturn Sir Ivan describes as ‘amazing’.

There has been much focus recently on excursions into the new areas with Casamigos Tequila, bought from George Clooney and others, among the big winners.

Diageo also has added bourbons such as Bulleit to its portfolio. The real stars are its core brands. Guinness at £4-plus a pint is the British Isles’ top beer tipple.

Johnnie Walker is delivering. Diageo’s greatest skill has been to encourage its whisky drinkers to move upmarket with Black Label and even Blue Label in great demand.

It has conquered the US in a way that few British companies manage, boosting our cash exports.

But a slowdown in sales growth in the first half of the current year disappointed and the shares suffered a setback.

Don’t expect this to dampen its spirits as it continues to add boutique brands to a luxury portfolio.

New clothes

Provident Financial, the 140-year-old doorstep lender, was in a parlous state when Malcolm Le May took over five years ago.

It was under regulatory scrutiny and an alumni, John van Kuffeler, had launched an audacious takeover bid.

With the help of FCA and this paper the assault was repelled. Le May is standing down and the Provvy, shorn of its doorstep lending, has rebuilt itself through the Vanquis credit card for the less well-off.

It is a pity when traditional names vanish. But in this case the rebuild as Vanquis Banking Group may be just as well.

This post first appeared on Dailymail.co.uk