Crypto leaders redirect focus to the UK Labour Party ahead of elections

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.

As reported by Bloomberg, the guidance comes amid widespread uncertainty over the future of cryptocurrency 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 British lawmakers. For example, just days before Sunak’s announcement, cryptocurrency executives gathered on the terrace of the House of Commons at an event hosted by Coinbase, demonstrating the industry’s ongoing bid to influence UK politics.

While representatives from both major political parties attended, the crypto industry is increasingly targeting Labor due to its significant lead in the polls.

The crypto regulatory landscape in the UK is somewhat fragmented. The Financial Conduct Authority (FCA) has introduced strict regulations, such as banning UK firms from offering crypto derivatives and Exchange Traded Notes (ETNs) to retail consumers.

These measures aim to protect consumers and reduce possible harm. However, the FCA allows professional investors, including investment firms and credit unions, to deal with these products under certain conditions.

Currently, the UK’s regulatory framework for cryptoassets is limited; The FCA oversees anti-money laundering (AML) and counter-terrorism financing (CFT) regulations. Cryptoasset service providers must register with the FCA and implement robust AML and CFT measures, including KYC and CDD procedures.

Additionally, the FCA published a discussion paper on the regulation of fiat-backed stablecoins; This document aims to align its regulatory standards with traditional financial instruments while also considering their unique risks.

Given these regulatory challenges and the upcoming election, the crypto industry is intensely focused on Labor’s potential policies. Although Starmer has not publicly stated his stance on cryptocurrencies, Labour’s consistent lead in the polls has led the industry to prepare for a possible shift in political power.

The industry has contacted key Labor figures such as Labour’s shadow chancellor Rachel Reeves and Shadow City Secretary Tulip Siddiq, predicting they could lead efforts to revive London’s post-Brexit status as a global financial centre.

In January, Coinbase hosted a breakfast roundtable with Reeves at the World Economic Forum, highlighting the industry’s strategic relationship with the Labor leadership. The participation of executives from major venture capital firms and fintech companies in these discussions reflected the high risks of the crypto sector.

Beyond high-level engagements, the crypto industry is also focusing on grassroots outreach in Labor strongholds. This shift in strategy aims to move away from a purely market-focused narrative and demonstrate the tangible benefits of digital assets for ordinary people.

Despite the industry’s efforts, the UK still lags behind other financial centers in implementing comprehensive crypto regulations. The European Union has adopted MiCA’s comprehensive crypto legislation, which is expected to be implemented this month.

In contrast, the UK relies primarily on a set of rules enforced by the FCA. The UK Treasury’s plans outlined in early 2022 propose regulating digital assets in a similar way to traditional financial services, but progress has been slow. The Treasury also proposed a regulatory overhaul this year.