Liz Truss resigned from her position as U.K. prime minister after a 44-day stint that rocked the country’s sterling and gilt markets.
The outgoing crypto-friendly prime minister stepped down after calls from at least twelve members of the Conservative Party.
Truss tax-cut effects on gilt and sterling
Later in her address, Truss said she would remain in office until another leader was chosen. The leader will be selected through a leadership election on Oct. 28, 2022. Former Chancellor of the Exchequer Rishi Sunak, House of Commons leader Penny Mordaunt, or one of several other leaders could end up with the top job.
Additionally, Truss has officially told His Majesty King Charles III of her resignation.
The U.K. gilt and sterling markets reeled after the prime minister announced unfunded £45bn tax-cut program. After the “mini-budget” announcement that cut tax for wealthy Britons from 45% to 40%, the sterling fell sharply. Later, the mini-budget also badly affected pension funds dependent on the gilt markets, causing the Bank of England to step in as a “market-maker of last resort.” After the mini-budget, Truss fired her former chancellor Kwasi Kwarteng. Later, Home Secretary Suella Braverman was also forced to resign on Oct. 19, 2022.
After Truss’ announcement, ten-year yields rose to 4.18% and sterling rallied 5% to $1.1278. Gilts remained elevated after a previous rally when Truss axed her tax-cut plans.
Accordingly, one Twitter trader, trader1sz, confirmed that the bottom was in for the U.K. currency. Having the currency bottom in means that the sterling has has already reached its lowest point during this market cycle and can only go up.
After the announcement, Bitcoin rose about 0.6% to $19,311, and Ethereum rose nearly 1% before dropping to $1,304.
Pro-crypto Truss out, future uncertain
Crypto industry pundits welcomed Truss into office on Sep. 6, 2022, hoping she would offer a light regulatory touch. She hinted at a more complementary approach to crypto in a 2018 tweet that gave the crypto industry reason to hope:
As Secretary of State for International Trade under former British Prime Minister Boris Johnson, Truss founded a trade network that she thought could benefit significantly from blockchain technology.
“We want to achieve a world-leading data and digital agreement, underwriting data flows but also dealing with issues like blockchain and artificial intelligence, thereby making sure that we and the U.S. are leading the world and able to share these economic opportunities,” she said at the time.
After Truss resigned, the future of crypto in the U.K. is uncertain. As one trader put it, the U.K. could be in for a rough period:
The Financial Services and Markets Bill, currently under committee debate in the House of Commons, may be put on the back burner. The next sitting for the discussion is scheduled for Oct. 26 and Oct. 27, 2022. The bill deals with stablecoin regulation in the U.K. The bill will only allow U.K. citizens to use reserve-backed stablecoins.
Future crypto regulation may depend on whether the new Prime Minister will keep the current chancellor Jeremy Hunt. Hunt will deliver a plan on Oct. 31, 2022, to fund Britain’s public accounts with £40bn.
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