Former Cabinet Ministers urge Treasury to make simple legislative change to unshackle the UK’s burgeoning digital economy

Conservative Member of Parliament for Clacton, Giles Watling, who sits on the Digital, Culture, Media and Sport Select Committee has today lodged a cross-party joint letter with the newly appointed Chancellor and his team in the Treasury. The letter calls for a simple legislative change which is preventing the UK’s digital-economy from fulfilling its potential and holding back capital markets for SMEs – reducing financing gaps that stifle innovation and economic growth.

Signed by the likes of Sir Stephen Timms MP, Labour grandee and former City Minister under Tony Blair, crypto-enthusiast and former Cabinet Minister, Matt Hancock MP and former Secretary of State for Wales, Alun Cairns MP, this cohort of parliamentarians call on the Government to keep pace with technological developments, ensuring the UK’s digital economy continues to thrive.

Notably, one of the lead candidates to take over Chairmanship of the highly influential Treasury Select Committee, John Baron is a signatory of this letter.

Despite the Government’s commitment to a ‘digital first’ approach to policymaking, a current anomaly in Stamp Duty and Reserve Tax (SDRT) legislation is unfairly hampering this ambition. Under the current legislation, a “market growth exemption” was introduced to specifically cover securities on SME growth markets to foster investment and kickstart a wave of growth in UK SMEs.

However, since its inception, the market and technologies have matured and evolved, but the legislation has not kept pace with this. As such, digital solutions are unfairly penalised compared to traditional ones – irrespective of the fact they offer the same product or service.

The signatories believe that whilst the “growth market exemption” has proved successful, current legislation is now inadequate, as new regulated markets which meet all conditions to become a “recognised growth market” are not classed as “recognised stock exchanges”, which means stamp duty is still incurred.

This can be rectified through one of the simplest legislative mechanisms, a statutory instrument. Should the Treasury heed the calls for this change, it would no doubt improve the conditions for SME’s as well as helping to improve the overall landscape and perception of the sector.

Benefactors of this solution are companies such as Archax, one of the biggest cryptoasset firms in the UK, which abdrn, the UK’s largest asset manager is the largest independent shareholder, and the first and only ever digital security exchange, brokerage and custodian regulated by the FCA.

Speaking about this initiative, Archax’s Founder and CEO, Graham Rodford said:

“This change in legislation would not only benefit Archax but will open up competition and innovation when providing services to SMEs which will also benefit the digital sector as a whole. To make the UK a more attractive place for digital assets firms to do business, the Government must start with making simple but impactful changes, such as the small change needed to the SDRT.”

“I hope the new Chancellor and his team in the Treasury will carefully consider this proposal and understand the positive impact this change could have on the way businesses, such as Archax, operate here in the UK. The world is on the cusp of a digital revolution – the UK must lead the way. We need tangible actions – rhetoric alone will not get us there.”