New UK Prime Minister’s Impact on Crypto Investors - What to Expect?
The United Kingdom recently got a new Prime Minister - Keir Starmer, a former human rights lawyer. Soon after his election, many sectors were left wondering about potential policy changes and regulations, among which is the cryptocurrency industry. As UK-based investors prepare for the new political landscape, it’s important to understand the implications of Starmers leadership on the future of cryptocurrencies in the country.
UK’s Historical Approach to Crypto
Before delving into Starmer’s potential impact on crypto investors, it’s important to review how the UK approached cryptocurrencies in the past. Generally, the UK maintained an open stance towards crypto. It recognised their value but also empahsised the need for their regulation, so that consumers are protected.
When it comes to crypto in the UK, the Financial Conduct Authority (FCA) has been at the forefront. It acts as the primary regulator for crypto activities in the UK and implemented registration requirements for crypto businesses, as well as enforced anti-money laundering (AML) regulations.
Keir Starmer's predecessor, Rishi Sunak, had shown a positive attitude towards cryptocurrencies. He expressed that he wants to turn the UK into a global "crypto hub," aiming to attract blockchain companies and innovation in the sector. He proposed the introduction of a "financial market infrastructure sandbox" to allow firms to experiment with crypto technologies. In a symbolic move, Sunak even requested the Royal Mint to create an NFT, showing that the UK is looking forward to crypto assets.
How Will Starmer Treat Crypto?
While the cryptocurrency industry was not mentioned in the Labour Party’s Manifesto or during their campaign, Labour said it will support tokenization and a central bank digital currency. Starmer still hasn’t made his crypto views clear, but industry experts have shared their thoughts.
Many are optimistic that the UK’s overall plan towards embracing financial innovation will continue. There is still a lot of talk about how Starmer will treat various regulated markets such as crypto and new online casinos in the UK. Industry insiders are closely monitoring any signals from Starmer’s administration. Some experts believe that Starmer will take a more conservative approach to crypto, potentially implementing strict regulations to protect consumers from the volatility of digital assets.
Jordan Wain, UK policy lead at Chainalysis, told CoinDesk, "A lot of the really important work has been done and it's not been done by the parties themselves, it's been done by government departments. It's been done by the FCA, they're the ones that are formulating legislation. They are not going to sweep all of that hard work off the table, it's not going anywhere."
Keir Starmer has appointed Tulip Siddiq as the new City Minister, who will be responsible for UK’s financial sector. The crypto industry is closely watching Siddiq’s moves on crypto, given her previous views on digital assets. Namely, she has already expressed interest in the potential of crypto assets, but also called for stronger consumer protections. In a 2022 article for the New Statesman, Siddiq wrote: "Properly regulated crypto assets have the potential to transform our economy and the financial services sector. Many innovative companies are embracing different forms of blockchain technology to improve transparency in finance and to create high-skilled, high-productivity jobs across the UK."
Although the Labour Party haven’t announced specific crypto plans, we expect to see several industries with new regulation or legislation. For example, there might be an increased focus on protecting retail investors from crypto-related risks. And since Labour is focused on green policies, we expect to see an inspection of energy crypto mining operations.
Historically, the UK has been a leading global financial centre. Therefore, Starmer can enhance his status if his government decides to embrace cryptocurrency and blockchain technology. The upcoming months will be crucial as Starmer’s government will start to unveil its plans and policies. For now, crypto investors are advised to keep a close eye on the developments and prepare for potential changes in the regulations.
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