On Wednesday, Rachel Reeves, the U.K.’s new Chancellor of the Exchequer met with Big Tech to discuss how the industry can “boost growth.” Among the attendees was Sriram Krishnan, general partner at Andreessen Horowitz.
Krishnan heads the U.K. office of a16z crypto, a venture capital firm with a portfolio that boasts Solana, Uniswap, EigenLayer, and Worldcoin, to name a few. While the meeting centered around AI, a source told Fortune, on the condition of anonymity, that there was brief mention of how blockchain technology could grow the U.K. economy, contingent on the government passing the legislation set out by Labour’s predecessors. While in power, former Prime Minister Rishi Sunak announced: “It’s my ambition to make the U.K. a global hub for crypto-asset technology.”
And Labour has dropped hints about sharing this vision. “There are lots of reasons that we can be optimistic," Laura Navaratnam, the Crypto Council for Innovation’s U.K. policy lead, told Fortune. “Unlike in the U.S., it’s not political—it’s technology,” added Ian Taylor, head of crypto and digital assets at KPMG U.K. and board advisor at lobbying group CryptoUK. As crypto becomes more politicized in the U.S., across the pond, it’s bridging the gap.
Softening on crypto
Buried within Labour’s 19-page provisional plan for financial services, published in January, is a pledge to make the U.K. a “global hub for securities tokenization,” which would involve “advancing work to clarify the law around tokenization, and working with regulators to establish a proportionate, outcomes-based regulatory regime.” And just two weeks before that plan was published, Reeves attended a breakfast hosted by Coinbase and a16z, posing beside Krishnan in an X post.
“She’s an avid listener. She had thoughtful questions, and then she delivered a message of very much wanting to make the U.K. a home for innovation. It’s going to be one of her priorities,” another crypto executive who has met with Reeves, told Fortune on the condition of anonymity.
Meanwhile, Tulip Siddiq, Labour’s Economic Secretary to the Treasury and City Minister, in charge of financial services, authored a 2022 op-ed making the case for regulation, and referred to the potential for blockchains to “transform [our] economy.” While Siddiq does characterize crypto as a “Wild West” for illicit purposes, Taylor says this tone has “softened,” based on meeting her on a handful of occasions, and gathering dozens of sound bites over the past 18 months.
Handing crypto over to the FCA
According to Reeves and Siddiq’s plan, Labour will build on the Conservatives’ framework for regulating stablecoins (fiat-backed digital tokens), and staking (a blockchain feature that rewards those who lock up their tokens to secure the network). The framework laid out plans to regulate this like traditional financial services. This means putting crypto under the remit of the Financial Conduct Authority (FCA), which is the equivalent of the SEC, except it’s a nongovernmental regulator. But to allow the FCA to publish and deploy its regulations, a law must be passed.
Before the election, this law was expected imminently. The industry was “reassured repeatedly” by the previous government it would land by summer, said Navaratnam. While the election has delayed that, Navaratnam and Taylor are “hopeful” about a year-end timeline.
“The probability of Labour doing anything negative with the current trajectory is very low,” says Taylor. He added that he’s met with half a dozen payment companies and fintechs with banking licenses waiting for regulation in order to issue stablecoins. He expects that once the legislation goes live, there will be a “significant increase” in ready-to-go sterling-backed coins.
Spotlight on crypto in the U.S. election
The U.K.’s nonpartisan approach is shining a light on crypto’s politicization in the U.S. During its arrest-warrant era of 2022, it was an industry that could unite both sides of the aisle in Congress; it was a question of law and order, not right versus left. But this year, its story has increasingly become one of the Democrats versus the Republicans.
Last week, Donald Trump told the 20,000 or so attendees of Bitcoin 2024 that resisting crypto is “un-American.” Of course, he failed to mention his previous scorn for the industry that has evaporated this election. If he’s reelected the Democrats’ “anti-crypto crusade will be over,” he told the sea of “Make Bitcoin Great Again” hats. Meanwhile, crypto lobbyists have raised more money in this election than any political action committee in history.
Crypto’s debut on the campaign trail isn’t all that surprising. The industry is bigger than ever before: Bitcoin’s market cap has grown 391% since the 2020 election. A Harris Poll survey published in May found that one-fifth of voters in swing states “consider cryptocurrency policies as a topic important enough to sway their support.” Another has found that 13% of Republicans not planning on voting for Trump report reconsidering this in light of his new crypto stance.
In an election that’s neck and neck, a few hundred thousand votes in swing states could make the difference. As Trump makes crypto a political issue, Vice President Kamala Harris’s hands are tied: She has no choice but to consider a “reset” on the industry, despite her party’s historical resistance to it.
But this political divide is perhaps harder to explain. Like the Democrats, Labour has historically been the party for working people, with an emphasis on wealth distribution over free markets. Indeed, Reeves has already announced plans to increase taxes for the wealthiest, including a 20% VAT on private school fees.
While crypto is often associated with unbridled libertarianism, in reality, a crypto-friendly government would define the guardrails for issuing tokenized assets. Implementing rules for the industry is one corner of policy that appears to be bridging the U.K.’s political gap—not stoking it. “It’s just not the same here,” says Taylor.
