by Simon Jennings, Executive Director of the UK Crypto Asset Business Council (UKCBC)
With the upcoming General Election pencilled in for Autumn next year, Labour finds itself in an enviable position – leading in the polls and poised to potentially form a government after more than a decade.
As expectations rise, industries that exist outside of the political mainstream are eager to understand Labour’s stance on issues. Many await clarity with bated breath. None more so than the UK’s crypto-economy.
Whilst early signals were not overwhelmingly positive, with Diane Abbott the then Shadow Home Secretary describing Bitcoin as “just a gigantic Ponzi scheme” in 2018, there have been encouraging voices of late – ones that start to recognise the transformative power of a properly regulated crypto asset market.
Meanwhile, on the backbenches, Labour grandees such as Lord McNicol, the former General Secretary and Sir Stephen Timms, the former Chief Secretary to the Treasury in Blair’s administration are both playing a crucial role in spearheading the debate on the opportunities and challenges facing the sector.
The crypto-economy is more than just Bitcoin and to understand the sector better they must look beyond tokens more broadly. The underlying technology is fueling a tidal wave of innovation– from tokenising real-world assets to powering the next iteration of the internet – Web3. It will be the cornerstone of the Fourth Industrial Revolution.
It is clear a portion of Labour voters care about the crypto economy, with recent research finding that 19% of them have invested in crypto assets. But why should the Parliamentary Labour Party (PLP) care and how can it help deliver on their wider ambitions for the UK?
Economic growth and credibility are vital considerations for any political party, and the Labour Party is no exception. Keir Starmer has set ambitious goals, aiming to secure the “highest sustained growth” in the G7 during Labour’s first term in office. Embracing the crypto-economy is one way to help achieve this objective.
Let’s look at the facts. All the major financial powerhouses from Standard Chartered to Normura have all created or backed crypto asset offerings. What’s more, analysis by PwC found that blockchain technology could boost the UK’s GDP by £57 billion over the next decade, a report by Citi forecasted that the tokenisation of assets could reach $5 trillion by 2030 and the CEO of BlackRock, Larry Fink, recently stated that this technology will be “the next generation for markets”. By recognising its potential and capturing some of this global opportunity for UK plc, Labour can demonstrate a forward-thinking approach to stimulate much-needed sustainable growth.
Financial inclusion and addressing inequalities are core underlying priorities for Labour. The crypto-economy can play a pivotal role in tackling these head-on by providing access to financial services for the unbanked and underbanked populations. With only a smartphone and access to the internet, individuals can participate in the crypto-economy, store value, make instant transactions, and access financial services without relying on traditional banking systems. By reducing barriers to entry, cryptoassets empower individuals and promote economic participation. Take Venezuela for example, whose economy is mired by hyperinflation and hemmed in by sanctions, both of which have devastating impacts on ordinary citizens. To counter this, cryptoassets are being increasingly used as a hedge against inflation that causes bank deposits to sharply depreciate in weeks or even days – helping to preserve capital and long-term financial security. For those building a pension, it is an absolute lifeline. It is a similar tale in Nigeria, where 45% of the population or 90 million people own crypto assets for exactly this reason.
Moreover, the crypto-economy offers unique opportunities to address social challenges and systemic inequalities. Take two examples. Blockchain technology is helping humanitarian efforts and delivering targeted aid to conflict zones, as we recently saw with the UNHCR launching a first-of-its-kind integrated blockchain payment solution to reach Ukrainian citizens displaced by the war with speed, agility, and accountability. Or look at developing economies such as Afghanistan, where the transparency, transferability, and immutability of smart contracts are starting to help eradicate counterfeit drug distribution – a plague on humanity that costs the lives of over a million deaths annually according to the WHO. The transformative power of the underlying technology can be at the forefront of promoting social good.
Labour’s pitch at the next General Election will undoubtedly focus heavily on reforming public services. The application of this technology can play a forward role in delivering on this ambition. Take the NHS, for example. A permissioned ledger for medical data and health records, which crucially patients’ control, would transform the relationship patients have with their healthcare data. But more broadly, everything from supply chain management and oversight, credential verification and Internet of Things (IoT) security for remote monitoring will deliver better transparency and access – leading to more informed decisions and improved patient outcomes.
Industry must engage with Labour, understand their unique concerns, and present a convincing case that highlights the social and economic benefits of embracing the crypto-economy. By building bridges and fostering constructive dialogue, Labour and industry can work together to formulate effective policies that better protect consumers and benefit the economy and society at large.
Rather than being part of the problem, the crypto-economy is part of the solution. So, in the pursuit of a robust, far-reaching policy agenda, we urge the Labour Party to engage with us to better understand how the crypto-economy can help them deliver on their ambitions for the UK.