TLDR
- Investment bank chair Lisa Gordon suggests taxing crypto purchases to encourage Britons to invest in stocks instead
- Gordon claims “over half of under-45s own crypto and no equities,” calling this trend “terrifying”
- The UK currently imposes a 0.5% stamp duty on London-listed shares, generating about £3 billion annually
- Crypto ownership in the UK has risen to approximately 12% of adults (about 7 million people)
- London’s stock market has experienced declining activity with only 18 companies listing in 2023 while 88 delisted
A leading UK investment banker has called for taxes on cryptocurrency purchases to encourage more Britons to invest in the stock market. Lisa Gordon, chair of Cavendish Financial, an investment bank specializing in smaller companies, believes shifting investment from crypto to equities would benefit the broader economy.
Gordon expressed concern about the growing popularity of cryptocurrency investments among UK residents. She told The Times that it
“should terrify all of us that over half of under-45s own crypto and no equities.”
The Financial Conduct Authority reported that crypto ownership in the UK has increased to about 12% of adults. This represents approximately 7 million people investing in digital currencies.
Currently, the UK charges a 0.5% stamp duty on shares listed on the London Stock Exchange. This tax generates around £3 billion annually for the government.
Gordon suggested that this stamp duty should be cut for equities and applied to cryptocurrency purchases instead. She believes this change would encourage more people to invest in company shares rather than digital assets.
The banker described cryptocurrency as “a non-productive asset” that “doesn’t feed back into the economy.” In contrast, she argued that stock investments provide growth capital to companies that employ people, innovate, and pay corporation tax.
“That is a social contract,” Gordon said about equity investments. “We shouldn’t be afraid of advocating for that.”
The London Stock Exchange has faced challenges in recent years. According to consulting firm EY, 2023 was one of the “quietest years on record” with only 18 companies listing on the exchange.
More concerning is that 88 companies delisted or transferred from the exchange during the same period. Many cited “declining liquidity and lower valuations compared to other markets” such as the United States as reasons for leaving.
Gordon serves as a member of the Capital Markets Industry Taskforce. This group of industry executives aims to revive the UK’s capital markets.
Cavendish Financial would benefit from increased stock market activity as the firm advises smaller companies on corporate actions like initial public offerings (IPOs). The bank reported losses of £4.3 million in the year to March 2024 due to what was described as the “most challenging market conditions for 30 years.”
Gordon believes that many Britons have “shifted to saving rather than investing.” She warned that this approach “is not going to fund a viable retirement.”
The FCA found that 70% of adults had savings accounts, while only 38% held shares either directly or through investment accounts. This suggests many Britons prefer cash savings over stock investments.
Financial pressures have affected saving and investing habits. The FCA reported that in the 12 months to January 2024, 44% of all adults either stopped or reduced saving or investing due to the cost of living crisis.
Despite these challenges, Gordon remains optimistic about the future of the London market. She described the UK as a “safe haven” compared to other markets, particularly the United States under Donald Trump’s administration.
Gordon recalled purchasing shares in British Gas 40 years ago during the famous “Tell Sid” advertising campaign. As a student at Dundee University, she “got excited about investing with my £20 of student money” in the utility’s shares.
Beyond individual investors, Gordon emphasized the importance of pension funds in revitalizing the UK stock market. She highlighted the 2023 Mansion House Compact, where pension funds agreed to invest up to 5% of their assets in unlisted companies.
Gordon suggested that pension funds should be required to make an “allocate or explain” disclosure about how they invest on the London Stock Exchange. She believes this transparency would encourage more institutional investment in the UK market.
Recent data shows potential for positive change. A Bank of America survey indicated that fund managers sold American stocks at the fastest-ever pace in March while making their highest allocation to London-listed shares since June 2021.
