UK Election: Why Labour’s Big Win May Be Bad News for Crypto

The Conservatives were never expected to win the UK’s general election — with polls rightly predicting all along that Labour would return to power after 14 years.

Nonetheless, it was a dramatic and significant night for British politics, with the Tories suffering their worst defeat ever and losing an eye-watering 250 seats.

Source: UK Parliament

Meanwhile, Sir Keir Starmer — the new prime minister — has secured a massive majority, winning 412 of the 650 seats that were up for grabs.

Inevitably, the attention now turns to what this would mean for crypto in the world’s sixth-largest economy. In short, the answer is quite a lot.

Rishi Sunak’s administration had aggressively banged the drum for digital assets, setting out a vision for the UK to become a “global crypto hub.” Those plans may fall by the wayside with Sir Keir in 10 Downing Street, not least because he’ll have far more pressing matters to deal with.

And the huge turnover of MPs, with 300 new politicians set to join the Commons, means the crypto industry has just lost some of its most valuable contacts in Westminster.

For evidence of this, just look at the state of the All-Party Parliamentary Group on crypto and digital assets, whose members were tasked with examining policies that affect the sector.

A grand total of eight Conservative MPs sat on this group — with chairwoman Lisa Cameron stepping down as a politician before the election was held. She wouldn’t have won anyway.

And out of the seven Tories remaining, every single one of them ended up losing their seat, meaning crypto has now officially lost its voice in the House of Commons. Now, only unelected members of the House of Lords remain in the group.

This should send alarm bells ringing among businesses and investors who have been crying out for greater levels of regulatory clarity.

‘Labour aren’t interested’

David Gerard, a renowned critic of cryptocurrencies, told Cryptonews that there was “little evidence that any party in the 2024 election cared about crypto.”

He said: “Neither Labour nor the Conservatives mentioned it in the weeks since the election was called. I don’t think the public is really very interested in crypto at present — they’re worried about everything else.”

Gerard is right here. The cost-of-living crisis, combined with the pain high interest rates are inflicting on mortgage payments, is much more of a pressing concern.

You could argue that political parties brave enough to talk about crypto would have faced criticism of being tone deaf — with Rishi Sunak facing similar criticism when he unveiled (later abandoned) plans for the UK to launch an official non-fungible token.

“I was slightly surprised that the Tories didn’t even mention crypto — Rishi Sunak has talked up the blockchain previously. But I suspected at the time that this was just because he was out of ideas,” Gerard added.

A factor here was undoubtedly the many, many, many gaffes and scandals that overshadowed Sunak’s campaign. Not only was he condemned for leaving D-Day commemorations early, but his party was swallowed up by allegations that senior officials betted on the date of the election — taking the focus away from his campaign messages.

But with Sir Keir Starmer now in the hot seat, is there any prospect that he’ll continue embracing digital assets in the same way his predecessor did?

“I’ve seen a lot of wishful thinking in the crypto press that Labour will do things for crypto when in power. But there just isn’t evidence they’re very interested,” Gerard told us.

A cautious welcome

Cryptonews reached out to several British crypto exchanges and lobbying groups for their reaction to Labour’s barnstorming win — but few wished to publicly comment about politics. That could be a sign that they don’t want to jump to conclusions about what Sir Keir’s administration will be like. It could also suggest they’re reluctant to lament the loss of Tories who backed their cause for fear of misjudging the mood, considering the party is plagued by scandal.

Kraken ‘s UK managing director Bivu Das said it will “be largely business as usual” for the crypto space as a policy framework has now been designed, but he warned: “Legislation is still pending and time is running out for the UK to seize the opportunity … The incoming government has an opportunity to keep driving innovation and growth in this emerging asset class and reinforcing the UK’s position as a leading jurisdiction for blockchain-based innovation.”

Back in January, before the election was called, Labour had released details of their “plan for financial services,” which mainly centered on tokenization and the rollout of a central bank digital currency, colloquially referred to by some as “ Britcoin .” But both of these policies didn’t end up making their way into the manifesto — with crypto not mentioned at all.

A spokesperson for Britain’s trade association for the digital assets sector, CryptoUK, told Cryptonews that the group had close ties to the last government, and struck an optimistic tone.

“We have established strong relationships with Labour MPs and policymakers, and we intend to strengthen these ties going forward to advance the UK’s digital assets industry,” they said.

And while CryptoUK noted that “jobs growth and inclusivity are key priorities” for Sir Keir Starmer, it argued the digital assets space “can significantly contribute to these goals.”

Warning a “comprehensive strategy” for the sector “remains elusive,” the spokesperson added: “As the landscape evolves rapidly, CryptoUK calls on Labour to prioritize clarity and proactive policymaking to fully harness our sector’s potential.”

Reasons to be cheerful?

While it may feel like it, the crypto space isn’t exactly starting from square one as Labour return to power for the first time since 2010, when Bitcoin was only 18 months old.

Sensing that the political winds were shifting, Coinbase made the shrewd decision to host a breakfast in Davos that was attended by Rachel Reeves, who now becomes the first female Chancellor of the Exchequer (finance minister) in UK history.

“The next Labour government will work with the tech sector to bring jobs and prosperity to Britain,’ she posted on X at the time.

Meanwhile, other senior Labour officials have also spoken out in support of Web3 , too.

Former MP Andy Burnham, who is now Labour’s Mayor of Greater Manchester and widely tipped to be a future prime minister one day, attended an event hosted by the Manchester Blockchain Alliance last month that went mostly unreported at the time.

In telling remarks, Burnham said that Web3 “fascinated” him — and he believes the space could democratize technology and boost inclusion.

Positioning Manchester as the natural home for businesses in this sector, he said he wanted to “make sure the talent we’ve got can come in… to make this the Web3 powerhouse we want it to be” — and told executives at the event that he was “in.”

Cryptonews asked Burnham’s office to comment on this feature, but a spokesperson said he was unable to because of the election campaign.

But Lisa McClory, who’s from the Manchester Blockchain Alliance, told Cryptonews: “Over the next couple of years, the crypto sector will need to adjust to a raft of new regulations globally, which will pose challenges. Blockchain, alongside AI, is part of the toolkit of important digital technologies required to deliver real world use cases for businesses and society.

“We hope to see innovation-friendly regulation as well as governmental support for founders and entrepreneurs in navigating these new regulatory frameworks.”

Another small thing worth mentioning at this point is that Nigel Farage — the like-him-or-loathe-him right-wing firebrand — has finally become an MP on his eighth attempt. He has been a vocal critic of CBDCs, even appearing at the Bitcoin Amsterdam conference in 2022. Unfortunately, given his nascent Reform UK party only has four seats, it’s unlikely his support for crypto will have much of an influence in shifting policy.

What now for ousted Tories?

Hundreds of former Conservative MPs are now waking up to the realization that they’re now unemployed — and eventually, some will go on to seek lucrative jobs in the private sector.

It’s highly likely that some of them will end up gravitating towards crypto, following in the footsteps of former chancellor Philip Hammond, the chairman of the custody firm Copper.

But with the Tories heavily weakened, and dwindling to just 121 seats, they’ll now have much less influence in the corridors of power than they used to.

July 4 sparked seismic change in the UK — the effects of which we won’t begin to see for weeks, months or even years to come.

And given the country’s dealing with an uncertain economy, a health service on its knees and wars in Ukraine and the Middle East, crypto will be far, far down Sir Keir Starmer’s in-tray.

That is, if it’s there at all.