UK’s New Economic Secretary Faces Scrutiny Over Potential ‘Crypto Crackdown’
Following the recent landslide election which saw the UK Labour Party win, Prime Minister Keir Starmer has begun appointing members to the new government. Among the appointments is Member of Parliament Tulip Siddiq, who has been assigned the role of Economic Secretary to the Treasury and City Minister. The appointment places Siddiq in a position of influence over policies concerning the regulation of digital assets and central bank digital currencies in the UK. However, her previous statements suggesting a potential “crypto crackdown” have drawn scrutiny.
Siddiq Calls for Framework to Address Crypto Risks
In a May 2023 op-ed published in the New Statesman, Siddiq called for a “comprehensive, all-of-government framework” to address the risks and opportunities presented by crypto assets. She compared the Conservative government’s approach to cryptocurrency to the “Wild West” and advocated for stricter regulations and protection against scammers. Siddiq emphasized that a Labour government would focus on attracting fintech companies to the UK while implementing proper regulation in the sector.
Economic Industry Recognition and Support
Siddiq’s stance on cryptocurrency has earned her recognition within the industry. In 2022, she was rated as one of the top ten UK lawmakers discussing crypto and blockchain in the House of Commons by the self-regulatory trade association CryptoUK. Nigel Green, CEO of deVere Group, a financial consultancy firm, expressed the belief that Siddiq would transform the UK into a global center for tokenized assets if Labour were to win the election.
Uncertain Priorities for the Labour Government
However, the priorities of the Labour government regarding digital assets remain uncertain. The focus initially seems to be on scrapping the Conservatives’ policy of deporting asylum seekers to Rwanda. Some experts speculate that housing and the National Health Service (NHS) will take precedence over the development of regulatory infrastructure for Web3. Edouard Hindi, Chief Investment Officer of Hedge Fund Tyr Capital, suggests that the new government will need to decide on the UK’s crypto policy before progressing with Web3 regulation.
Economic Challenges Ahead
Notably, the UK economy faces several challenges, including inflation, economic growth, and unemployment. As of April 2024, the UK’s inflation rate is notably high, driven by supply chain disruptions and rising energy costs.
UK Economic Increases Regulatory Scrutiny
The UK has been among the countries that have ramped up regulatory efforts following some high-profile bankruptcies last year. The Financial Conduct Authority (FCA) oversees crypto activities, focusing on anti-money laundering measures and consumer protection. Last year, the FCA implemented new rules that require crypto firms to register with the financial regulator and have their marketing materials approved by an FCA-authorized firm. Key updates include exchanges providing clear warnings to customers about the risks associated with crypto investments. The FCA has warned that failure to comply can result in criminal charges, including unlimited fines and up to two years’ imprisonment, for domestic and overseas exchanges operating in the UK. As a result, leading crypto exchanges Coinbase, Revolut, and Binance have updated their mobile and web applications to comply with the new regulations.
