What a return to Labour could mean for crypto policy in UK

The UK will hold its first election in five years, potentially changing the landscape of crypto policy in the region.

On 22 May, British Prime Minister Rishi Sunak announced that the UK election would be held on 4 July, following the Conservative Party’s significant losses in early May. These losses indicate that Labor may return to power after a 14-year absence, leading to widespread speculation about its effects on various policy areas, including the crypto market.

Under the Conservative government, the UK maintained a relatively neutral stance on crypto. Regulators such as the Financial Conduct Authority (FCA) have created frameworks to oversee crypto activities, aiming to protect consumers and establish clear rules for the market. But these regulations have also driven some major crypto businesses away from the UK

Binance, Bybit and Luno are among the companies that have limited their services or ceased operations for UK customers to comply with local rules.

However, it is not yet known how events will develop. Labor has so far made no clear public statement on its crypto policy, leaving room for speculation. Although the party seeks a balanced approach to crypto regulation, some of its members have already at least expressed skepticism about the industry.

In 2018, Labor Member of Parliament for Hackney North and Stoke Newington, Diane Abbott, called Bitcoin a “Ponzi scheme” and called on the Labor government to crack down on crypto. Abbott expressed concerns about Bitcoin’s volatility and its potential to be used to finance illegal activities, including terrorism.

“If everyone took Bitcoin money and suddenly tried to buy a new car, everything would collapse. “So we’re concerned about the extent to which Bitcoin is a Ponzi scheme, but we’re certainly concerned about how it’s being used to fund terrorist activity in the here and now, and that’s something we’re looking at.”

diane abbott

Market reaction to a potential Labor government could be mixed. Increased regulatory scrutiny could deter institutional investors and entrepreneurs and potentially alienate the country even further from major crypto companies. However, clear and robust regulations could ensure long-term stability for the UK crypto market and protect its reputation from the risks associated with the large-scale hacks and bankruptcy scandals that periodically disrupt the industry.