UK Labour Party Commits to Digital Pound While Considering Crypto
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Last week’s landslide victory for Britain’s Labour Party places Keir Starmer in a unique opportunity to reshape the UK’s financial landscape. The Labour Party has already made, as part of its mandate for financial services published in January, a commitment to expand the use of AI in financial services, to move Open Banking forward for “increased competition in retail payments,” to embrace “Open Finance” and to work on creating a UK-central digital currency, a state-backed digital pound.
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While the details on various proposals were missing in the party’s manifesto which touched upon a central bank digital currency, Labour’s plans for financial services showed “more of a commitment than any other political party” to a creating a digital pound, according to Jannah Patchay, executive board director at the Digital Pound Foundation. In February 2023, the UK Treasury and the Bank of England already QQi announced that state-backed digital pound would likely be introduced later this decade.
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While the previous Conservative government did not move towards digital currencies due to the fact that cryptocurrencies are not backed by a central bank and the value can shoot up and down rapidly, the digital pound, issued by the Bank of England, would be far less volatile. Ten digital pounds will always be worth the same as £10 in cash, the Treasury maintains.
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The next hurdle, for the cryptocurrency trade, however, is to convince the UK Treasury and the Bank of England that the technology proposed to develop the digital pound is similar to that of cryptocurrencies such as Bitcoin and Ethereum. And many experts in the field see the new Labour government as having the potential to move towards digital assets, a move that would position the UK as a global cryptocurrency hub, according to Nigel Green, CEO of deVere Group, a leading financial advisory and fintech.
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Speaking to the Financial Mirror, Green stated, “To date, Starmer’s stance on crypto remains somewhat nebulous,” adding, “That said, Labour’s Rachel Reeves, the new Chancellor of the Exchequer, has shown openness to the tech sector, while MP Tulip Siddiq (formerly Shadow Economic Secretary to the Treasury) has boldly stated that Labour would transform the UK into a global centre for tokenised assets if victorious.”
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The previous Conservative government led by Rishi Sunak had many intentions—even some unfulfilled plans—to elevate the status of crypto and Web3 in the UK. However, these plans were not developed in any meaningful way. Now, with yet another change of Prime Minister conterminous to a shift in political ideologies, it is possible that the crypto industry may remain in limbo.
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That said, the new Labour government has given domestic advocacy groups the perfect opportunity to launch their public manifestos in hopes of guiding government policy on cryptocurrency or even crypto lottery. While this surge of interest has certainly not come to the forefront of discussion around the new government without vast lobbying efforts undertaken by the crypto industry, the fact is that many in the crypto sector have been working for years to get the British government on board with crypto and it seems that Labour might be the party to move this agenda forward.
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According to a survey commissioned by the digital asset platform, Zumo between June 7 and 11, roughly one-third of 3,124 adults between the ages of 18 and 34 in the UK stated they were concerned about the future of crypto in the country while more than a third of young adults believe “the growth of the crypto sector should be a key consideration for politicians, with four in ten considering it vital for the UK’s economic growth prospects.”
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The support for the digital pound and cryptocurrency is no longer a fledgling dream for England or the rest of Britain. Now, under the Labour government there is renewed public support that may transform the way montary systems work in favour of the public and not just the financial industry.
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