The Labour Party won the House of Commons election in a landslide, and the direction of crypto in the UK once again became an open question, with the former prime minister's promise to create a "global cryptocurrency hub".
Author: Mia, ChainCatcher
Compiled by: Marco, ChainCatcher
On July 4, the dust settled on the British general election. The Labour Party won an overwhelming victory in the House of Commons election, winning 412 seats in the House of Commons, and party leader Starmer moved into 10 Downing Street. This was the most one-sided election victory in the history of the Labour Party, ending the Conservative Party's 14-year rule. This historic election result undoubtedly brought major changes to the British political landscape and left many suspense for domestic and foreign observers.
Former British Prime Minister Sunak once called for cryptocurrencies to be part of his policies, and when he was elected, he promised that the UK would embrace encryption technology and make the UK a "global cryptocurrency center." So will the new government continue with existing policies to promote innovation and growth in the encryption industry?
Currently, the Labour Party has remained tight-lipped about how the Starmer-led UK government will handle the regulation and growth of the industry, which makes the future of cryptocurrency, blockchain and related vertical industries in the field of digital assets full of uncertainty.
The new UK government’s stance on encryption
As the world's traditional financial center, the City of London has always been a bellwether for the global financial industry, and the same is true for the crypto industry.
But as early as when the Conservative Party was in power, the British government, led by former Prime Minister Sunak, had expressed its hope that the UK would become a cryptocurrency center and consulted on future plans (including stablecoin rules). In addition, Bim Afolami, the outgoing economic secretary of the UK Treasury, has attended several fintech conferences and promised that the government would issue secondary legislation for stablecoins.
Compared to the Conservative Party, which has been in power for 14 years and has a clear attitude towards cryptocurrencies, the newly elected Labour Party focuses on the economy, police and the National Health Service.
Although new Prime Minister Starmer's attitude towards cryptocurrencies is still somewhat vague, his shadow cabinet chancellor of the exchequer Rachel Reeve (who will take over as chancellor of the exchequer) has shown an open attitude towards the technology industry.
Shadow Cabinet Minister Tulip Siddiq once said: "If the Labour Party wins, it will transform the UK into a global hub for tokenized assets."
In addition, the Labour Party has publicly stated that it will support the Bank of England's digital pound plan.
The CEO of financial services giant DeVere Group said, "The cornerstone of establishing the UK as a global cryptocurrency center lies in the development of a clear and comprehensive regulatory framework." London has always been a leading global financial center. "By embracing cryptocurrencies and blockchain technology, Starmer can enhance London's status. London's strong financial infrastructure, combined with progressive crypto regulation, can attract international businesses and investors."
The UK government's next encryption policy is still unclear
In January this year, the British Labour Party released a financial services plan, which included making the UK a center for securities tokenization by "advancing work to clarify the laws related to tokenization." Although the document did not mention words such as "cryptocurrency" or "blockchain," it did say that "embracing securities tokenization and central bank digital currency" was part of the party's "vision" for the UK.
Brian Rose, founder of the Cryptocurrency and DeFi Academy, believes that the openness shown by incoming Chancellor of the Exchequer Rachel Reeves toward the technology industry is encouraging, but at the same time said, "Rumors that the Labour Party plans to address the tokenization of securities and issue CBDCs as part of its financial policy are worrying. I hope she can work with the cryptocurrency community to develop market-leading policies rather than launching poorly conceived plans without any consultation."
Regarding the Labour Party's coming to power, members of the British crypto community said that the Labour Party still has more work to do for the crypto industry, including passing the necessary regulations determined by the previous government.
Jordan Wain, UK policy director at Chainalysis, is optimistic about this and does not believe that the party rotation will change the UK's previous encryption process. "A lot of really important work has been done, but it was not done by the parties themselves, but by the UK Financial Conduct Authority (FCA), who are the ones who make the laws. They will not erase all this hard work, and this work will not be in vain."
Bivu Das, managing director of Kraken UK, shared the same view, saying: “Clearly, the political landscape in the UK has changed, but for crypto, we think it will be largely business as usual. The new government has the opportunity to continue to drive innovation and growth in this emerging asset class and cement the UK’s position as a leading jurisdiction for blockchain innovation.”
Keld van Schreven, co-founder of British digital asset investment company KR1, believes that the change of parties comes at a "critical moment" for the crypto industry. "Great progress has been made in developing a regulatory framework, but more work needs to be done to make the UK a global cryptocurrency center."
In addition, British crypto lobby group Crypto UK said it had contacted members of the Labour government and called on the party to prioritize clear and proactive policy development to fully realize the potential of the crypto industry.
Most crypto experts believe that despite the changes in the political landscape, the UK's progress in the field of cryptocurrency and blockchain will not be interrupted, but is expected to continue to develop under the impetus of the new government. Although the Labour Party's open attitude towards the technology industry is welcomed, concerns about the implementation of specific policies remain.
Before the general election, the British government had expected to launch a regulatory framework for cryptocurrencies and payment stablecoins in July. As the House of Commons will be in recess after the general election, most experts said the plan may be delayed.
At this point, the Labour Party has not made any significant decisions on the future of cryptocurrencies, nor has it taken any strong stance on blockchain and other related technologies.
Crypto issues are gaining importance in the election
From the approval of the BTC spot ETF to the implementation of crypto regulation in various regions, the crypto industry is developing and improving, and cryptocurrencies are gradually entering the public eye, affecting the global economy. The "attitude towards crypto" has also begun to become a bargaining chip in international politics.
In the upcoming 2024 US election, the role of crypto assets has undergone a significant change, from Trump's resistance to it in the early days of his administration to Trump's public support now. This change not only demonstrates that the status of crypto assets on the international political stage has gradually moved from "ignored" to "actively involved", but also reflects the increasing importance of this field to American public issues. The rise of cryptocurrency in the election competition is based on its increasing focus on public attention.
This change has also profoundly affected the policy stance of the current US President Biden and his administration. The Biden administration has begun to show more affinity with crypto assets, not only recognizing its potential value in the economic system, but also publicly expressing its openness to cryptocurrency donations. This shift has undoubtedly paved the way for the further integration of cryptocurrencies in the US political and economic fields.
Galaxy Digital founder Michael Novogratz said: "Growing acceptance of cryptocurrencies in the political world means that in the long run it may not matter who wins."
Previously, in response to the U.S. SEC’s recent moderate moves in the crypto space, Hong Kong blockchain lawyer Wu Wenqian said, “The U.S. SEC’s regulatory attitude seems to be changing.” Wu Wenqian is also optimistic about the British Labour Party coming to power. He predicts that “the stablecoin and tokenization regulations proposed by the Conservative Party during its tenure may still be able to move forward in the future, but the specific timetable cannot be determined at present.”
Wu Wenqian told ChainCatcher that the UK’s regulatory attitude towards the crypto industry this year is indeed more rigorous, “including the publicity code announced in October last year, which caused many exchanges to withdraw from the UK market, including Bybit, Binance, etc. Apple App Store also requires crypto industry apps to be removed from the UK market.”
In terms of the approval process, Lawyer Wu pointed out that the UK Financial Conduct Authority (FCA) is inefficient and the process is relatively slow in approving cryptocurrency registration companies. This situation undoubtedly increases the difficulty and uncertainty for new companies to enter the market, and poses a certain obstacle to the normal development of the encryption industry. He said, "I hope that the Labour Party will change its rigorous and prudent attitude towards the encryption industry and allow the industry to develop normally."
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