Young voters in the UK are calling for crypto to be moved up the political agenda, with over a third of crypto investors believing crypto should be a priority issue in the upcoming general elections. The sentiment follows recent developments like the Bank of England and the Financial Conduct Authority’s (FCA) consultation on a Digital Securities Sandbox and the listing of the UK’s first crypto ETPs on the London Stock Exchange. For many young voters, the issue seems to be a key priority, however, the UK government has taken a proactive but phased approach to cryptocurrency regulation.
Young Voters’ Enthusiasm for Crypto
Crypto investors are using cryptocurrencies like Bitcoin and Ethereum as payments for various types of activities, like online gambling. Ben Horlock states that cryptocurrencies are far more secure and provide users with an added level of anonymity. He adds that a casino with the fastest payout time can typically process crypto transactions within minutes, due to its underlying blockchain technology and decentralised nature.
Added to this, the country has plans to become a ‘global hub for the crypto and digital assets industries’, announced in 2022. As a result of these plans, legislations have been discussed to allow backed stablecoins to be used as a payment method.
As a result of such widespread use of cryptocurrencies, young UK voters think it’s crucial for the UK to strengthen its position as a digital assets leader and want to see the government take a more proactive approach to allow innovation and growth in the country.
These voters are enthusiastic about the potential of cryptocurrencies, both as an investment opportunity and for the UK’s status as a digital finance hub. So far, 11% of Brits, which is approximately 5.6 million of the population, have invested in cryptocurrency as of 2024, with 70% of investors aged between 18 and 44. Younger investors view cryptocurrencies as a pathway to higher long-term returns on their investments.
The reason young voters are pushing for crypto to be a higher-priority political issue is due to concerns about the crypto sector’s future prospects. Their main reasoning is that some crypto-friendly MPs are standing down this election. They also believe that the change in government offers an opportunity for the crypto industry to build a positive relationship with new legislators. However, crypto is unlikely to be an immediate priority for the incoming government as the focus has been on other economic and social issues.
UK Government’s Crypto Regulatory Approach
The UK government is taking a cautious approach to regulating the crypto industry, with plans to introduce new legislation by mid-2024. The new regulations are focused on bringing a wide range of crypto activities, like operating crypto exchanges, custody services, and lending, under the regulatory oversight of the FCA. The government’s goal is to position the UK as a global hub for digital asset innovation and cryptocurrencies, while also protecting consumers from market manipulation.
According to the Future Financial Services Regime for Crypto Assets, the government aims to put in place a robust regulatory framework that provides clarity around the rules and requirements for crypto firms operating in the UK. The intention is to provide consumers with confidence in using crypto services and products as well as enable responsible innovation and growth in the crypto sector. The aim is to create a supportive regulatory environment that allows the crypto industry to thrive in the country.
The government is taking a phased approach to regulating cryptocurrencies, with the hope that the phased rollout of regulations positions itself as a global crypto hub. The phased rollout includes:
- Prioritising stablecoins: The government has identified stablecoins as a top priority, with plans to introduce legislation by mid-2024. This is due to stablecoins being viewed as having more immediate potential and posing more immediate concerns as a means of payment, compared to more volatile cryptocurrencies like Bitcoin.
- Aligning with traditional finance: The government plans to align crypto regulations with its existing regulatory framework for traditional financial services. This will require a more measured approach to ensure the rules are appropriate and effective for the unique characteristics of crypto assets. The goal is to create a level playing field and consistent standards for the new asset class. In other words, the government is trying to avoid the EU’s Markets in Financial Instruments Directive MiFID framework, but would rather tailor the rules that align with international recommendations from bodies like IOSCO for regulating crypto with other financial services.
- Extraterritorial scope: The new crypto regulations will have “extraterritorial scope” which will be applied to activities “in or to the UK”, which means that the new regulations will extend beyond just UK-based firms and will apply to any crypto activities that have a connection to the UK. This is common practice to ensure oversight of global, cross-border activities.
Young Voters’ Contrasting Views vs. Measured Approach
Young voters recognise the need for appropriate regulation as burgeoning crypto markets such as some of the best online casinos have now begun accepting cryptocurrency as a payment method. They are concerned that overly restrictive rules could stifle crypto innovation in the UK. They also want to see the government strike the right balance between ensuring responsible innovation and providing consumer protection and would like the UK to maintain its competitiveness as a global digital assets hub.
While these young voters are enthusiastic about the future of crypto, the government’s phased regulatory rollout may be seen as too slow by young, crypto-savvy voters. Ultimately the government is trying to balance innovation with reducing risks. This measured approach seems to be creating tension with the demographic most about crypto’s potential. Ensuring the regulatory environment supports younger investors’ interests will be an important consideration going forward.
