Regulation
Crypto executives redirect their attention to the UK Labor Party ahead of the election
As the UK prepares for a snap election on July 4, the cryptocurrency industry is strategically turning its attention to the Labor Party, led by Keir Starmer.
This redirection, like reported by Bloomberg, comes amid widespread uncertainty over the future of crypto regulation in the UK, following Prime Minister Rishi Sunak’s surprise call for a snap election.
Recent events have highlighted the crypto industry’s proactive efforts to build strong ties with UK lawmakers. For example, just days before Sunak’s announcement, crypto executives gathered on a terrace of the House of Commons at an event hosted by Coinbase, demonstrating the industry’s continued attempt to influence the British politics.
While representatives from both major political parties were in attendance, the crypto industry is increasingly targeting the Labor Party due to its substantial lead in the polls.
The UK crypto regulatory environment remains somewhat fragmented. The Financial Conduct Authority (FCA) has imposed strict regulations, such as prohibition UK firms are no longer offering crypto derivatives and exchange-traded notes (ETNs) to retail consumers.
These measures aim to protect consumers and mitigate potential harm. However, the FCA allows professional investors, including investment firms and credit institutions, to engage in these products under certain conditions.
Currently, the UK’s regulatory framework for cryptoassets is limited, with the FCA oversee anti-money laundering (AML) and anti-terrorist financing (CFT) regulations. Crypto asset service providers must register with the FCA and implement robust AML and CFT measures, including KYC and CDD procedures.
Additionally, the FCA has published a discussion paper on the regulation of fiat currency-backed securities. stable coinsaiming to align their regulatory standards with traditional financial instruments while taking into account their unique risks.
Given these regulatory challenges and the upcoming election, the crypto industry is keenly focused on the Labor Party’s potential policies. Although Starmer has not explicitly stated his stance on cryptocurrencies, Labour’s consistent lead in the polls has the industry bracing for a possible shift in political power.
The industry has been working with key Labor figures such as Labor shadow chancellor Rachel Reeves and Ghost Town minister Tulip Siddiq in the hope they could spearhead efforts to rejuvenate the London’s status as a global financial center after Brexit.
In January, Coinbase hosted a breakfast roundtable with Reeves at the World Economic Forum, highlighting the industry’s strategic engagement with Labor leaders. Executives from major venture capital firms and fintech companies participated in these discussions, reflecting the high stakes for the crypto sector.
Beyond high-level commitments, the crypto industry is also focusing on grassroots outreach in Labor strongholds. This shift in strategy aims to demonstrate the tangible benefits of digital assets for ordinary citizens, moving away from a purely market-driven narrative.
Despite the industry’s efforts, the UK still lags behind other financial centers in implementing comprehensive crypto regulations. The European Union has passed sweeping crypto legislation, which is expected to implement Mica this month.
In contrast, the UK relies on a patchwork of rules primarily enforced by the FCA. The UK Treasury’s plans, presented in early 2022, propose to regulate digital assets in the same way as traditional financial services, but progress has been slow. The Treasury continues propose a regulatory overhaul this year.