As the UK elections approach on July 4, the Conservative Party, which has introduced several pro-crypto policies in recent years, is expected to lose hundreds of seats. Meanwhile, in contrast to the U.S. presidential campaign where digital assets have become a focal point, cryptocurrencies have not been a major focus for British candidates.
Despite the apparent lack of emphasis, the relevance of cryptocurrencies is evident. The Financial Conduct Authority's latest data indicates that 9% of UK adults owned crypto in August 2021, roughly equivalent to five million people. Given the recent bull market, this number is likely underestimated.
Behind-the-Scenes Lobbying
Prime Minister Rishi Sunak and his Conservative Party have consistently expressed their ambition for the UK to become a "global cryptoasset hub." However, they are trailing significantly in the polls after a challenging campaign. A prediction model from The Economist suggests the Conservatives have less than a 1% chance of winning.
In light of this, businesses in the crypto industry are now courting Labour, who are leading in the polls and likely to take over Downing Street. Some progress has already been made. In January, before the campaign began, shadow chancellor Rachel Reeves attended a breakfast hosted by Coinbase in Davos.
With the campaign underway, Coinbase has intensified its efforts by launching its Stand With Crypto campaign in the UK. Initially an American initiative, this campaign aims to engage the crypto community in the legislative process. A launch event was held in the House of Commons last month, attended by government ministers and senior Labour members.
Policy Recommendations
Coinbase has followed up with a seven-point plan, described as a "manifesto," to position the UK as a global leader in fintech, digital assets, and tokenization. Key policy recommendations for the next government include:
Welcoming fintech, Web3, and crypto firms to the UK
Establishing a comprehensive regulatory framework for crypto assets
Providing regulatory clarity on staking
Exploring how decentralization could transform the economy
Encouraging all departments to utilize blockchains to improve public services
Launching a tokenization strategy for the City of London
Updating legal frameworks for digital assets
Other groups, like the U.S.-based Crypto Council for Innovation, seek clarity on existing regulations and a broader regulatory regime.
Labour's Stance on Crypto
Despite these ambitions, it is unclear how much of a priority crypto would be for Labour leader Sir Keir Starmer if he becomes the next Prime Minister. Starmer has outlined urgent priorities, including imposing strict spending rules, establishing a state-owned energy firm, reducing health service waiting lists, tackling smuggling gangs, and hiring more police officers and teachers.
Potential Policy Reversals
A significant concern for crypto investors and businesses is whether Labour would reverse the crypto-friendly policies introduced during Rishi Sunak’s tenure. The Tories had planned to finalize stablecoin legislation before Parliament's summer recess, but this has been delayed due to the election. There is uncertainty over whether these proposals will be pursued under a new government.
The Crypto Council for Innovation remains optimistic, stating that Starmer appears to be a focused leader unlikely to dismantle the Conservatives' crypto work on principle. They believe significant legislation, like that related to stablecoins, will likely continue. The FCA, being independent, retains its staff regardless of government changes.
An Opportunity for Crypto?
The council views a new government as an opportunity for the crypto sector, with potential valuable contacts among newly elected MPs. However, with the Conservatives expected to face substantial losses, some of the industry's key allies in London may be ousted.
In conclusion, as the UK heads to the polls, the crypto industry's future remains uncertain, but there is cautious optimism that the incoming government will continue to support digital assets.
Notice:
,,The information and views presented in this article are intended solely for educational purposes and should not be taken as investment advice in any situation. The content of these pages should not be regarded as financial, investment, or any other form of advice. We caution that investing in cryptocurrencies can be risky and may lead to financial losses.“