Original title: Labour victory in UK elections renews crypto industry optimism

Original author:ROBERT D. KNIGHT

Original source: cointelegraph

Compiled by: Mars Finance, Eason

The UK general election ended with a landslide victory for the Labour Party, ending 14 years of Conservative rule. With it came a new wave of optimism about taking positive action and getting involved in the cryptocurrency industry. Outgoing Prime Minister Rishi Sunak touted his vision of a “crypto-centric” economy, but industry observers said his promises were severely lacking in action. With the Labour Party in power, hopes for positive action have been cautiously rekindled. Industry body CryptoUK told Cointelegraph:

“We have strong relationships with Labour MPs and policymakers and we intend to strengthen these links to advance the development of the UK digital asset industry.”

Nick Cowan, CEO of fintech company Valereum Group, remained optimistic despite rarely mentioning cryptocurrencies during the campaign.

“They have previously recognised the benefits of tokenised securities, fintech and even central bank digital currencies. That’s ‘big talk’ and if they really capitalise on the benefits of change in finance, capital markets and digital assets, then it could be a powerful pillar to attract investment and adoption, and therefore support growth,” Cowan told Cointelegraph.

CryptoUK also highlighted opportunities for growth. “We recognise that jobs, growth and inclusion are priorities for Keir Starmer’s government. We firmly believe that our industry can make a significant contribution to these goals,” CryptoUK said. Cowen went on to add: “This is a great opportunity for the government to seize to create an enabling environment that allows innovators to innovate. There is always hope and change!”

Figure 1: The UK general election ended with an overwhelming victory for the Labour Party

Source: BBC

What does the Labour Party think about cryptocurrencies?

Unlike the United States, where cryptocurrencies have made headlines in the 2024 presidential campaign, the British general election has been surprisingly quiet on the issue. For example, the Labour Party’s manifesto did not mention cryptocurrency once. However, in January this year, the Labour Party released its “Financial Services Plan,” which did mention the industry. In the document, the Labour Party said that tokenization—the digital representation of financial assets using distributed ledger technology—“presents important new opportunities for the UK.”

Labour said tokenization “can increase liquidity, provide access to new asset classes and diversification, and enhance risk management (by reducing counterparty risk and other operational risks).”

Therefore, “a future Labour government will push for clarity on the law around tokenization and work with regulators to build a proportionate, outcomes-based regulatory regime to oversee this technology, positioning the UK to become a global leader in tokenization.”

Labour said it would introduce a regulatory sandbox and trial tokenized government bonds (UK government debt listed on the London Stock Exchange). Finally, Labour said it would seek partnerships with other financial centers to introduce interoperable standards.

The power of change

“Change” was a major theme of the Labour Party’s campaign, and change is exactly what cryptocurrency advocates want.

Oliver Linch, a financial regulatory lawyer and CEO of cryptocurrency exchange Bittrex Global, explains how Labour is launching a major charm offensive on the financial sector ahead of the election.

“Labour has historically been seen as less tough on economic issues than its Conservative counterparts, but they have been actively engaging with City of London dignitaries and key influencers to reassure them of Labour’s pro-growth, pro-capitalism and pro-innovation stance,” Linch said.

As Linch notes, while the Conservatives are generally seen as being “tougher” on economic issues, that reputation has been tarnished over the past decade and a half.

If austerity spending plans and post-Covid inflationary pressures weren’t bad enough for the Conservatives, the party has failed to reap any clear benefits from Brexit.Perhaps the nadir of Conservative government came in 2022, when Liz Truss was prime minister for 49 days and her unfunded tax cuts caused the pound to plummet.

Truss was one of 251 Conservative politicians to lose their seats. Incoming Labour MPs must now meet the expectations of the British public, who will demand better from them.

Linch believes Labour's election victory represents a major opportunity.

“Now that the election is over and Labour has a clear majority in hand, they can be bolder and seize the myriad opportunities presented by digital assets,” Linch said. “As a center-left party, Labour has every reason to support comprehensive action on cryptocurrencies — a task that has been largely unaccomplished despite the Conservatives’ declared enthusiasm.”

European Outlook

Another opportunity, Linch said, lies in differentiating the U.K. from European lawmakers who are currently working on the EU’s Market for Crypto-Assets Regulation (MiCA).

“Dissatisfaction with MiCA regulations has reached a peak as participants face unresolved legal and operational issues,” Linch said. “Given that Labour has pledged not to rejoin the EU, capitalizing on the current dissatisfaction with MiCA could be a strategic move to boost growth and deliver on numerous manifesto commitments.”

Joey Garcia, director and head of public affairs, policy and regulation at Xapo Bank, also sees potential in this area.

“MiCA is widely viewed as an overly cautious and protective approach that clearly favours existing and developed financial services businesses. A proactive intervention by a Labour government would involve avoiding the pitfalls of over-regulation while ensuring that the UK’s security ecosystem has controlled, clear and secure boundaries,” Garcia told Cointelegraph. “Overall, the Labour government’s approach can be described as cautiously proactive,” he added.

Very narrow window

While both Linch and Garcia see opportunity in the UK, Linch points out that this window of opportunity will only be open for a while.

“With a clear majority, Labour now has the opportunity to deliver on the socially progressive opportunities that cryptocurrencies offer, drive growth for the UK economy, and protect consumers and the wider public,” Linch said. “To do this will require rapid action to meet the December MiCA implementation date, but all the puzzle pieces are in place. The incoming City of London [Economic Secretary to the Treasury] should make Web3 a top priority for the new Treasury team.”