Cavendish Bank Chair Proposes Taxing Cryptocurrencies to Revive UK Stock Market and Economy

UK Faces Growing Concern Over Cryptocurrency’s Role in Investment Landscape

As more young people in the UK increasingly turn to cryptocurrencies over traditional investments, questions are being raised about the long-term impact on the country’s financial ecosystem.

With an alarming number of under-45s opting to hold digital currencies rather than stocks, concerns about how this shift could affect the broader economy have come to the forefront.

Lisa Gordon, Chair of Cavendish Investment Bank, has been vocal about the need for action, urging the government to impose taxes on crypto transactions to bring balance back to the financial markets.

Crypto Ownership Surges, Stock Market Interest Declines

Recent shows that over half of people under the age of 45 now own cryptocurrencies, a trend that has caught the attention of financial experts like Gordon.

She has expressed alarm over the fact that many of these crypto holders have no investments in stocks, a shift she believes could harm both personal wealth accumulation and economic stability.

Gordon told “The Times" on 23 March 2025,

“It should terrify all of us that over half of under-45s own crypto and no equities.”

While cryptocurrency might promise quick speculative gains, Gordon argues that it fails to contribute to the economy in any meaningful way.

She stated,

"Cryptocurrencies are non-productive assets and don’t help the real economy.”

In contrast, stocks provide essential growth capital to businesses that employ people, foster innovation, and pay taxes that fund public services.

The Case for Taxing Crypto and Reducing Stamp Duty on Stocks

To counter this growing trend, Gordon has suggested introducing a tax on crypto transactions, similar to the 0.5% stamp duty that currently applies to shares listed on the London Stock Exchange (LSE).

She believes this could encourage more individuals to invest in traditional equities and, by extension, support the UK’s businesses and economy.

Gordon further proposes that the government should reduce the stamp duty on equities to make them more attractive to investors.

This could stimulate investments in UK-based companies, potentially encouraging more firms to go public on the LSE.

She explained,

"Equities provide growth capital to companies that employ people, innovate and pay corporation tax. That is a social contract. We shouldn’t be afraid of advocating for that.”

Investment Sentiment in the UK Cools Amid Stock Market Decline

The shift from stocks to crypto reflects a wider trend that has been affecting the UK’s stock market for several years.

In 2024, only 18 companies listed on the LSE, a significant drop from previous years.

Meanwhile, 88 companies delisted or moved their operations to other financial markets, many citing declining liquidity and lower valuations compared to competitors like the US.

This shift has raised concerns about the future viability of the LSE, which has historically been one of the world’s leading financial markets.

Gordon remains steadfast in her belief that the UK is still a safe haven for investment, despite the challenges.

She highlights the stability the UK offers in an uncertain global environment, stating,

“The UK is a safe haven compared to markets such as the US, which has lost trillions of dollars in its stock markets due to President Donald Trump’s tariff threats and fears of a recession.”

Rising Cost of Living Further Complicates Investment Trends

In addition to the shift towards cryptocurrencies, the ongoing cost of living crisis is also contributing to a decline in traditional savings and investments.

A 2024 survey from the Financial Conduct Authority (FCA) revealed that 44% of UK adults had either stopped or reduced their savings and investment efforts due to financial pressures.

Nearly a quarter of those surveyed reported using savings or liquidating investments to cover day-to-day expenses.

This trend is concerning, especially given that many young people are prioritising short-term crypto holdings over longer-term investments in traditional assets like stocks.

Back in 2022, according to the FCA’s report, around 70% of adults in the UK have a savings account, and 38% either own shares directly or through an investment account, which allows up to £20,000 ($26,000) of tax-free savings annually.

On top of that, only one in four 18-24 year olds hold investments.

In 2022, 24% of individuals aged 18-25 and 32% of those aged 25-44 had investments. (Source: FCA)

The shift from stocks to cryptocurrencies can be attributed to the taxes on traditional investments, while cryptocurrencies remain untaxed and offer the potential for faster gains, making them more appealing to many investors.

Gordon has warned that this shift away from equities could leave many Britons unprepared for a secure retirement, as crypto investments, though potentially lucrative in the short term, lack the stability and growth potential of stocks.

The Debate Around Crypto Regulation and Taxation

While Gordon’s suggestion to apply tax measures to cryptocurrencies has sparked debate, it also highlights the growing divide between proponents of digital currencies and traditional finance advocates.

On social media X platform, critics, like Mudtooth (@mikematvei), argue that the UK’s heavy regulations and taxes already discourage investment, driving away investors and wealth creators.

Mudtooth, reflecting the frustrations of some within the crypto community, stated,

“UK is one of the worst countries when it comes to taxing people with tough regulations. It’s driving away investors and millionaires, and the situation is only getting worse.”

Despite these concerns, Gordon believes that action is necessary to restore balance to the financial system.

However, Harish (@HarishDGupta) argued,

“Punishing crypto users won’t fix markets. Making stocks more competitive will.”

With cryptocurrency adoption continuing to rise among younger generations and the stock market facing increasing pressure, the UK government is now at a crossroads.

The decision to impose taxes on digital currencies could have far-reaching consequences, potentially reshaping the financial landscape in ways that could either enhance or hinder future economic growth.