Reeves falls for the crypto poison and exposes us all to becoming victims of a global scam, warns ALEX BRUMMER
When it comes to sound investment judgment, there is no more reliable voice than Warren Buffett. At the age of 94, after 60 years at the helm of Berkshire Hathaway, it should come as no surprise that he is stepping back from the fray.
His lair in Omaha, Nebraska, is far away from New York's bright lights. But down the decades, he has been a lender of last resort at times of disruption.
When the investment bank Salomon Brothers ran into difficulties in 1990, amid a trading scandal, Buffett stepped in as chairman and cleaned up.
In 2008, when Goldman Sachs came within a whisker of collapse, Buffett proffered $5billion of temporary capital to propel it back to safe land.
As Joe Biden was beating a hasty retreat from fossil fuels, Buffett showed his hand by snapping up Occidental Petroleum.
The Oracle of Omaha has an unalloyed view of cryptocurrency. Buffett describes it as 'probably rat poison squared' and asserted shareholders could be assured that Berkshire would not invest in crypto.
It would be wonderful if Chancellor Rachel Reeves had been listening. In an example of financial lunacy, she has vowed to back the builders of the fintech and crypto space, while ensuring strong financial protection.
Backing UK fintech is a great prize as it builds on British creative leadership in the space. The list of UK fintech successes is impressive and growing.
Worldpay blazed a path which others, such as payments outfit Wise and internet banks Monzo, Revolut and Atom have followed.
Crypto is entirely different. The perpetrators of current ransomware attacks on Marks & Spencer and the Co-op, causing deep anxiety for employees and customers alike, inevitably demand payment in crypto.
It is the favoured medium of exchange for financial hooligans, crooks and terrorist groups such as Hamas.
Anonymity allows it to be moved surreptitiously from crypto accounts, known as wallets, to repositories in exotic locations.
The bezzle was exposed by the Sam Bankman-Fried and FTX saga in 2023. Just how murky the crypto world has become is illustrated by a weekend headline.
It recounted that French police are investigating the kidnappings of people linked to cryptocurrency after a 60-year-old man had his fingers chopped off by attackers demanding a ransom. This is the new, fast-growing area of investment, which Reeves looks keen to embrace.
She has been inspired by a desire to stay in lockstep with the zealots dominating US financial regulation and a Trump dynasty building crypto billions.
The UK's approach is to bring crypto assets, including stablecoins (ostensibly backed by real money), within the regulatory framework.
Until now, the approach of the Financial Conduct Authority has been to warn consumer and investors away from snake oil sales people offering crypto investment.
The paradox is that by creating a framework, it will confer legitimacy to an asset class with no transparency. Central banks, including the Bank of England, mostly want no truck with crypto.
It has no more relationship to real currency, as a store of value, than the paper money on a Monopoly board.
Regulation is meant to protect the consumer. Crypto governance exposes us all to becoming victims of a global scam.
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