At a conference in London this week, Nigel Farage, leader of the UK Reform Party, positioned himself as a "supporter" of the digital asset sector and put forward a series of policy proposals. Specifically, it includes: imposing a uniform capital gains tax of 10% on cryptocurrencies; using seized cryptocurrencies to establish a national Bitcoin reserve of approximately 5 billion pounds; halting the Bank of England's digital pound project; and allowing taxes to be paid in the form of cryptocurrencies (not mandatory). This policy proposal bears similarities to three policies proposed by Donald Trump during his cryptocurrency campaign. For example, opposition to central bank digital currencies, open partnerships with cryptocurrency mining companies and industries, and the White House sending signals in its digital asset strategy that leadership in fintech is a priority at the federal level. However, the policy transmission path in the United States is very clear - policy statements have been repeatedly reflected in the capital flows of spot Bitcoin ETFs, and such capital flows have largely driven market demand. The pace of policy advancement in the UK is completely different. The Bank of England’s latest progress report shows that the Bank of England and the UK Treasury are still in the design and exploration phase of a potential digital pound and have not yet decided whether to move forward with the project. According to the Consultation Paper No. 25/14 (CP25/14) issued by the UK Financial Conduct Authority (FCA), the focus of market attention in the short term is on the scope of regulated stablecoins and the custody rules that are in the consultation stage. Meanwhile, the UK is preparing to allow the issuance of tokenized investment funds, a move that would provide banks and asset managers with an easy channel for market access that is independent of election policy proposals. Factors such as power distribution, policy process and time nodes determine that the reform party’s policy propositions are difficult to translate into actual policies. After the 2024 UK general election, the Reform Party only held 5 seats in the 650-seat British Parliament, while the Labour Party came to power with an absolute majority. In the UK, tax rate adjustments require approval through the Finance Bill. The government is responsible for setting the reserve framework, with the Bank of England assisting in its implementation. Both primary and secondary legislation must be reviewed and approved by the House of Commons and the House of Lords. According to the Dissolution and Convocation of Parliament Act, the next UK general election will not be held until August 2029 at the earliest. In this parliament, smaller parties are unable to influence the Bank of England or the Treasury's policies, and backbench bills rarely become law. Even if some of Farage's policy proposals gain support, they would need to be implemented by the current government. If any of its policy proposals are incorporated into mainstream policy, the data behind the core proposals will determine the potential impact. Bitcoin-related data in the UK Based on the exchange rate of 1.328 pounds to the US dollar, the 5 billion pounds Bitcoin allocation is equivalent to approximately 6.64 billion US dollars. If calculated at a price of $112,000 per Bitcoin, this means that the UK needs to purchase or hold approximately 59,000 to 60,000 Bitcoins, accounting for about 0.30% of the current total Bitcoin circulation. The UK already holds a significant amount of seized Bitcoin, with law enforcement reports indicating that 61,000 Bitcoins were seized in connection with a 2016 hack. Theoretically, with this reserve, the plan of "retaining seized assets to establish reserves" is feasible. However, under the UK's Proceeds of Crime Act, seized assets are usually liquidated first and used for compensation, which means that if the government wants to hold seized assets as reserves, it needs clear legal authorization. At the tax level, cryptocurrencies are currently subject to capital gains tax. While a flat 10% rate will reduce the effective tax burden for high-tax taxpayers and potentially change the market entry, loss-taking strategies, and holding periods for cryptocurrencies in the UK, this tax rate adjustment still requires the government to submit and approve the Finance Bill before implementation. For market participants who focus on policy transmission paths rather than campaign rhetoric, the underlying mechanisms influencing capital flows are already underway. The improvement of stablecoin issuance and custody rules, coupled with a clear development path for tokenized funds, will jointly build an institutional-level market infrastructure. This infrastructure will not only expand the liquidity of the British pound in the cryptocurrency field, but also reduce the operational friction costs of market neutral strategies and basis strategies. Although there are differences between the UK's policy path and the US's ETF model, as the regulated infrastructure continues to improve, the market impacts of the two may gradually accumulate. For this reason, campaign policy proposals will only be meaningful if they are adopted by the governing party or if they intersect with processes already underway at the Financial Conduct Authority or the Bank of England. Comparison with US Bitcoin Policy By comparing transatlantic policies, we can better understand Farage's choice of words. Trump has expressed opposition to the Federal Reserve's launch of digital currency, publicly sought support from mining companies, and sent signals at the federal level to emphasize the leading position in the digital asset field. These measures have provided a clear development direction for the cryptocurrency industry. Subsequently, the policy transmission is reflected through the subscription and redemption of spot Bitcoin ETFs, and the relevant data will be reflected in the weekly fund flow report. At present, the UK has not yet formed a local spot Bitcoin ETF channel comparable in scale to that of the United States, which means that the key factors affecting the activity of the UK cryptocurrency market in the short term are more regulated custody services, connectivity between banks and cryptocurrency markets, and tokenized fund vehicles, rather than sovereign-level demand. If the UK allocates sovereign Bitcoin on the scale proposed by Farage, this action will be clearly visible in the global ledger of country-linked Bitcoin holdings. Data from on-chain analysts shows that the US government controls a large amount of seized Bitcoin; El Salvador also holds thousands of Bitcoins on its balance sheet. The UK currently holds 61,245 Bitcoins, making it one of the largest Bitcoin holders in the world (based on measurable scale). Although this signal is very clear, the impact at the monetary policy level is still limited by the overall size of the UK's foreign exchange reserves and the Bank of England's inflation target. Therefore, we need to focus on the relevant legal basis, implementation process and institutional objectives. If the Reform Party were to win an absolute majority in the next UK general election and come to power, it would be an unprecedented electoral reversal in modern British political history. The party only won five seats in the 2024 general election. To increase from five seats to an absolute majority in Parliament (it would need to occupy at least 326 of the 650 seats), its seat increase would exceed the record of seat growth achieved by any single party in a general election in British history. Previous notable seat gains in UK history include: Labor's 2024 seat surge: 211 more seats than in 2019. The largest number of seat changes in British general election history occurred in 2024, with a total of 303 seats changing hands; the previous highs were 289 seats in 1931 and 279 seats in 1945. Market background and policy feasibility If a policy causes approximately 60,000 bitcoins to be withdrawn from circulation, or if the same amount of bitcoins is continuously purchased over a period of time, it will marginally change the overall trend of market capital flows. The implementation path of the policy is crucial, and the legal basis for deciding to retain seized assets rather than auction them is equally critical. These decisions need to be made by the government and the Bank of England within the existing framework, not by small opposition parties. Here's a quick overview for readers interested in the data surrounding Farage's policy proposals: Looking ahead, the policy direction can be judged by the following three key signals: First, the Bank of England stated that the time plan of the Bank of England and the Treasury on the digital pound and the modernization of the payment system will determine whether the scope of the relevant design work will be adjusted and the pace will change. Second, the progress of the UK Financial Conduct Authority in formulating stablecoin and custody rules will determine the speed of infrastructure construction for the British pound in the cryptocurrency field. According to the UK Financial Conduct Authority's plan, the implementation of the final rules and subsequent supervision will bring cryptocurrency-related activities into a more standardized regulatory scope. Third, if the major political parties decide to adopt some of Farage’s policy proposals, the relevant trends will first be reflected in the party manifestos and the draft text of the Finance Bill, and may only be reflected in the sovereign reserve data later. Currently, the Labour Party holds a majority of seats in Parliament, the legislative process proceeds as usual, and existing regulatory work continues. These factors together determine that the UK's cryptocurrency policy will continue to move along the direction set by the UK Financial Conduct Authority and the Bank of England, rather than the policy path proposed by the Reform Party.At a conference in London this week, Nigel Farage, leader of the UK Reform Party, positioned himself as a "supporter" of the digital asset sector and put forward a series of policy proposals. Specifically, it includes: imposing a uniform capital gains tax of 10% on cryptocurrencies; using seized cryptocurrencies to establish a national Bitcoin reserve of approximately 5 billion pounds; halting the Bank of England's digital pound project; and allowing taxes to be paid in the form of cryptocurrencies (not mandatory). This policy proposal bears similarities to three policies proposed by Donald Trump during his cryptocurrency campaign. For example, opposition to central bank digital currencies, open partnerships with cryptocurrency mining companies and industries, and the White House sending signals in its digital asset strategy that leadership in fintech is a priority at the federal level. However, the policy transmission path in the United States is very clear - policy statements have been repeatedly reflected in the capital flows of spot Bitcoin ETFs, and such capital flows have largely driven market demand. The pace of policy advancement in the UK is completely different. The Bank of England’s latest progress report shows that the Bank of England and the UK Treasury are still in the design and exploration phase of a potential digital pound and have not yet decided whether to move forward with the project. According to the Consultation Paper No. 25/14 (CP25/14) issued by the UK Financial Conduct Authority (FCA), the focus of market attention in the short term is on the scope of regulated stablecoins and the custody rules that are in the consultation stage. Meanwhile, the UK is preparing to allow the issuance of tokenized investment funds, a move that would provide banks and asset managers with an easy channel for market access that is independent of election policy proposals. Factors such as power distribution, policy process and time nodes determine that the reform party’s policy propositions are difficult to translate into actual policies. After the 2024 UK general election, the Reform Party only held 5 seats in the 650-seat British Parliament, while the Labour Party came to power with an absolute majority. In the UK, tax rate adjustments require approval through the Finance Bill. The government is responsible for setting the reserve framework, with the Bank of England assisting in its implementation. Both primary and secondary legislation must be reviewed and approved by the House of Commons and the House of Lords. According to the Dissolution and Convocation of Parliament Act, the next UK general election will not be held until August 2029 at the earliest. In this parliament, smaller parties are unable to influence the Bank of England or the Treasury's policies, and backbench bills rarely become law. Even if some of Farage's policy proposals gain support, they would need to be implemented by the current government. If any of its policy proposals are incorporated into mainstream policy, the data behind the core proposals will determine the potential impact. Bitcoin-related data in the UK Based on the exchange rate of 1.328 pounds to the US dollar, the 5 billion pounds Bitcoin allocation is equivalent to approximately 6.64 billion US dollars. If calculated at a price of $112,000 per Bitcoin, this means that the UK needs to purchase or hold approximately 59,000 to 60,000 Bitcoins, accounting for about 0.30% of the current total Bitcoin circulation. The UK already holds a significant amount of seized Bitcoin, with law enforcement reports indicating that 61,000 Bitcoins were seized in connection with a 2016 hack. Theoretically, with this reserve, the plan of "retaining seized assets to establish reserves" is feasible. However, under the UK's Proceeds of Crime Act, seized assets are usually liquidated first and used for compensation, which means that if the government wants to hold seized assets as reserves, it needs clear legal authorization. At the tax level, cryptocurrencies are currently subject to capital gains tax. While a flat 10% rate will reduce the effective tax burden for high-tax taxpayers and potentially change the market entry, loss-taking strategies, and holding periods for cryptocurrencies in the UK, this tax rate adjustment still requires the government to submit and approve the Finance Bill before implementation. For market participants who focus on policy transmission paths rather than campaign rhetoric, the underlying mechanisms influencing capital flows are already underway. The improvement of stablecoin issuance and custody rules, coupled with a clear development path for tokenized funds, will jointly build an institutional-level market infrastructure. This infrastructure will not only expand the liquidity of the British pound in the cryptocurrency field, but also reduce the operational friction costs of market neutral strategies and basis strategies. Although there are differences between the UK's policy path and the US's ETF model, as the regulated infrastructure continues to improve, the market impacts of the two may gradually accumulate. For this reason, campaign policy proposals will only be meaningful if they are adopted by the governing party or if they intersect with processes already underway at the Financial Conduct Authority or the Bank of England. Comparison with US Bitcoin Policy By comparing transatlantic policies, we can better understand Farage's choice of words. Trump has expressed opposition to the Federal Reserve's launch of digital currency, publicly sought support from mining companies, and sent signals at the federal level to emphasize the leading position in the digital asset field. These measures have provided a clear development direction for the cryptocurrency industry. Subsequently, the policy transmission is reflected through the subscription and redemption of spot Bitcoin ETFs, and the relevant data will be reflected in the weekly fund flow report. At present, the UK has not yet formed a local spot Bitcoin ETF channel comparable in scale to that of the United States, which means that the key factors affecting the activity of the UK cryptocurrency market in the short term are more regulated custody services, connectivity between banks and cryptocurrency markets, and tokenized fund vehicles, rather than sovereign-level demand. If the UK allocates sovereign Bitcoin on the scale proposed by Farage, this action will be clearly visible in the global ledger of country-linked Bitcoin holdings. Data from on-chain analysts shows that the US government controls a large amount of seized Bitcoin; El Salvador also holds thousands of Bitcoins on its balance sheet. The UK currently holds 61,245 Bitcoins, making it one of the largest Bitcoin holders in the world (based on measurable scale). Although this signal is very clear, the impact at the monetary policy level is still limited by the overall size of the UK's foreign exchange reserves and the Bank of England's inflation target. Therefore, we need to focus on the relevant legal basis, implementation process and institutional objectives. If the Reform Party were to win an absolute majority in the next UK general election and come to power, it would be an unprecedented electoral reversal in modern British political history. The party only won five seats in the 2024 general election. To increase from five seats to an absolute majority in Parliament (it would need to occupy at least 326 of the 650 seats), its seat increase would exceed the record of seat growth achieved by any single party in a general election in British history. Previous notable seat gains in UK history include: Labor's 2024 seat surge: 211 more seats than in 2019. The largest number of seat changes in British general election history occurred in 2024, with a total of 303 seats changing hands; the previous highs were 289 seats in 1931 and 279 seats in 1945. Market background and policy feasibility If a policy causes approximately 60,000 bitcoins to be withdrawn from circulation, or if the same amount of bitcoins is continuously purchased over a period of time, it will marginally change the overall trend of market capital flows. The implementation path of the policy is crucial, and the legal basis for deciding to retain seized assets rather than auction them is equally critical. These decisions need to be made by the government and the Bank of England within the existing framework, not by small opposition parties. Here's a quick overview for readers interested in the data surrounding Farage's policy proposals: Looking ahead, the policy direction can be judged by the following three key signals: First, the Bank of England stated that the time plan of the Bank of England and the Treasury on the digital pound and the modernization of the payment system will determine whether the scope of the relevant design work will be adjusted and the pace will change. Second, the progress of the UK Financial Conduct Authority in formulating stablecoin and custody rules will determine the speed of infrastructure construction for the British pound in the cryptocurrency field. According to the UK Financial Conduct Authority's plan, the implementation of the final rules and subsequent supervision will bring cryptocurrency-related activities into a more standardized regulatory scope. Third, if the major political parties decide to adopt some of Farage’s policy proposals, the relevant trends will first be reflected in the party manifestos and the draft text of the Finance Bill, and may only be reflected in the sovereign reserve data later. Currently, the Labour Party holds a majority of seats in Parliament, the legislative process proceeds as usual, and existing regulatory work continues. These factors together determine that the UK's cryptocurrency policy will continue to move along the direction set by the UK Financial Conduct Authority and the Bank of England, rather than the policy path proposed by the Reform Party.