On Monday morning, June 22, Keir Starmer finally acknowledged what his Cabinet, parliamentary colleagues and the public had already concluded: he no longer had the authority to lead.
In doing so, he became the sixth prime minister in a decade – a level of political instability unmatched in modern British history. Every sector is now asking the same question: Who and what comes next? So, for digital assets, let’s unpack that.
Direction of Travel
From a policy perspective, the ship has largely set sail. Regulators are in the final stages of formalising a comprehensive framework, officials are listening, and engagement has been genuinely constructive.
This week’s announcement from the Bank of England illustrates the point well, even if it was partly overshadowed by political noise. Its policy statement and draft rules on sterling-denominated systemic stablecoins marked a clear step forward.
The required proportion of backing assets held in central bank deposits has been sensibly reduced from 40% to 30%, while the caps on holdings have been replaced by issuance limits.
“Each systemic stablecoin will be subject to an initial issuance maximum of £40 billion,” wrote The Bank of England.
We are imminently expecting a handful of policy statements from the FCA – covering everything from cross-cutting handbook reforms and the Regulated Activities Order. These will likely land much before a new Ministerial HM Treasury team is installed.
I mention this because political cycles may be volatile, but regulatory frameworks are built through sustained, technical engagement.
Politically speaking, we have navigated seven City Ministers since 2022 alone. Yet despite the political turbulence, the notion of a “global cryptoasset hub”, first coined by former PM Rishi Sunak, has survived.
Whoever walks through the door of No 10 – and whichever team follows them – will not reverse this. The wheel has already turned.
UK Crypto Sector Needs a Clear Political Wall
While we have made great progress on several ‘sticky’ issues for the sector, there are still some critical areas that need clear political will: the future direction for DeFi, a workable prudential regime for firms, workable FinProms rules, and a level tax playing field for stablecoins to name a few.
We must keep engaging at a political level to keep this momentum and keep landing messages around growth, productivity and jobs – all areas that transcend personnel. It is incumbent on industry to ensure that message carries through. We will certainly be playing our part.
More crucially, the digital asset agenda must not become politicised and dragged into the culture wars in the way it did in the US and as we’ve begun to see this year in the UK, thanks to so-called ‘crypto donations’.
This latest news shows how quickly the conversation descends into many of the usual tropes industry is familiar with, which are largely based on misunderstanding and misinformation.
Because strip away the headlines and the memes, and what we are actually talking about is rather prosaic. This is plumbing.
Financial infrastructure required to ensure the City of London remains a global centre of finance. With yesterday marking the tenth anniversary of Brexit, the point feels all the more pertinent.
That objective should transcend party lines. Encouragingly, there are signs that it does. Just last week, Conservative Party peers tabled amendments to the Financial Services and Markets Bill calling for a wholesale tokenisation strategy and a dedicated digital asset framework.
Meanwhile, the Liberal Democrats are actively developing their own policy platform for the sector.
And it must remain that way. The long-term success of the UK’s digital asset ecosystem will depend not on partisan point-scoring.
Who Steers the Ship?
It is too early to call who might stand against Burnham, but a coronation rather than a contest looks like the most probable outcome, especially following the early backing of Wes Streeting, himself long touted as a likely contender.
To add a layer of Westminster intrigue, sections of the media have been quick to elevate Al Carns as a possible dark horse contender. Yet the arithmetic looks challenging. Without the backing of the 81 MPs needed to trigger a contest, his route to the ballot is narrow.
So, with Burnham a few steps from No.10, attention inevitably turns to who might take up the keys to No.11, where the UK’s finance minister lives.
At this stage, Ed Miliband, Wes Streeting and Shabana Mahmood all appear to be in the frame as favourites.
On the face of it, Burnham is keeping his cards close to his chest. Whether this reflects genuine indecision or carefully managed ambiguity remains unclear.
More likely, it reflects an internal debate within his team about the future ideological direction of the Labour Party, with Reform UK waiting in the wings, buoyed by recent local election successes.
For now, the picture is one of competing centres of gravity rather than a settled plan, with No. 11 still very much up for grabs.
Other names are circulating. Yvette Cooper as a steady hand for markets, Miatta Fahnbulleh with her more radical economic vision, or even Louise Haigh, who is helping Burham run his campaign, as a wildcard.
What Does the Next UK PM Bring for Crypto?
For our sector, the jury is out. None of the frontrunners has meaningfully engaged with the digital assets industry to date.
The bookies’ favourite is a 2029 election, giving any new leader up to three years. That window must be used wisely, and it won’t be plain sailing for Burnham. A sharp lurch to the left risks alienating the very New Labour voices that brought Stamer’s Labour back to power.
Major foreign policy questions on Ukraine and Gaza remain unanswered and will prove divisive. On the economic front, whispers of significant cost-of-living interventions, particularly on energy bills and VAT, with limited financial headroom, suggest that borrowing may rise.
The markets’ reaction, as we saw with the pound strengthening and borrowing costs easing on news of Starmer’s departure, will be telling. History shows that bond market confidence can make or break an administration.
However, expect Burnham to make overtures to the City and roll back on some of his more hardline agenda in advance of coronation day to ensure he lands softly in No.10 and markets don’t give him a headache.
His team is already briefing about seeking guidance from well-known establishment figures such as Andy Haldane, a former Bank of England economist, to do just this.
But stepping back from the personalities, the task now is not to reopen the argument over digital assets, but to finish it properly, without losing focus on the inevitable noise that surrounds any moment of political transition.
Here at the UKCBC, we will keep fighting the good fight.
Bitrue