What a return to Labour could mean for crypto policy in the UK
The United Kingdom will hold its first election in five years, potentially changing the landscape of crypto policy in the region.
On May 22, British Prime Minister Rishi Sunak announced that the United Kingdom elections will be held on July 4, following significant losses for the Conservative Party in early May. These losses hint at a possible return to power for the Labour Party after a 14-year hiatus, leading to widespread speculation about the implications for various policy areas, including the crypto market.
Under the Conservative government, the U.K. has taken a somewhat relatively neutral stance on crypto. Regulatory bodies like the Financial Conduct Authority (FCA) have established frameworks to oversee crypto activities, aiming to protect consumers and create clear rules for the market. However, these regulations have also driven some large crypto businesses away from the U.K.
Binance, Bybit, and Luno are among those that have either limited their services or ceased operations for U.K. customers to comply with local rules.
Nonetheless, it’s yet to be seen how things will unfold. The Labour Party hasn’t made any explicit public statements on its crypto policy so far, leaving room for speculation. While the party may seek a balanced approach to crypto regulation, some of its members have already expressed skepticism about the industry, to say the least.
In 2018, Labour Member of Parliament for Hackney North and Stoke Newington, Diane Abbott, referred to Bitcoin as a “Ponzi scheme” and called for a Labour government to crack down on crypto. Abbott voiced concerns about Bitcoin’s volatility and its potential use in funding illegal activities, including terrorism.
“If everyone took their Bitcoin money and tried to buy a new car all at once the whole thing would collapse. So, we are worried about the extent to which Bitcoin is a Ponzi scheme but we are certainly worried about how in the here and now it is being used to fund terrorist activity and that is something we are looking at.”
Diane Abbott
The market’s reaction to a potential Labour government could be mixed. Increased regulatory scrutiny might deter institutional investors and entrepreneurs, potentially distancing the country further from major crypto businesses. However, clear and robust regulations could provide long-term stability for the UK crypto market, protecting its reputation from the risks associated with large-scale hacks and bankruptcy scandals that periodically disrupt the industry.
