Bitcoin and Digital ID Shape UK’s Fight for Liberty
The UK government stands as the third largest sovereign holder of bitcoin, possessing around 61,250 coins in its custody. Last week, Southwark Crown Court confirmed the seizure of bitcoin associated with a Chinese fraud, now valued at over £5 billion, following the guilty plea of defendant Zhimin Qian for possessing and transferring criminal property. In light of this situation, government officials have thus far declined to consider the potential strategic role of bitcoin. In May 2025, Emma Reynolds, stated that establishing a national bitcoin reserve was ‘not appropriate’ for the UK market. The recent Labour Party conference in Liverpool shifted its focus from bitcoin to digital identity. During the discussions, Visa’s Mandy Lamb stated: “the trick is how do you link payments with IDs?” The Prime Minister’s keynote speech did not include any mention of Digital ID. Observers indicated that the omission was indicative of political sensitivity. A public petition against digital ID cards has amassed over 2.7 million signatures, positioning it as one of the largest petitions in the history of Parliament. The government, however, persists in portraying digital identity as a mechanism for economic inclusion and growth. Officials have indicated that it could provide a £4.3 billion boost to the economy, while the Tony Blair Institute has contended that the public is in favor of a modern identity system that would ensure fairness, control, and convenience.
Civil liberties groups have contested the government’s portrayal of digital identity as a means of inclusion. Report Checkpoint Britain cautions that such systems are likely to exclude rather than include, citing Britain’s poor record on major data breaches and polling that reveals 63 per cent of the public do not trust the government to safeguard a universal identity database. The report underscores the potential danger of mission creep, wherein identification documents initially necessary for public services might evolve into requirements for employment, housing, benefits, voting, and even routine expenditures. Liberty has expressed comparable apprehensions, cautioning that digital ID systems may create obstacles for marginalized communities. International examples demonstrate that initiatives launched under the guise of access can ultimately lead to exclusion. James Dewar, expressed his views on Visa’s vision of linking digital IDs to payment, stating that another significant concern is the concentration of power. He stated, “We need to call out the unholy alliance of mega corporations and consultancy firms cosying up to governments to sell them their advice services and help build technological, legal and regulatory moats jurisdiction by jurisdiction.” Whether this pertains to CBDCs, AI, or Digital IDs. They are colluding to consolidate power for their own interests rather than enhancing their products and services to serve customers through open technologies in a free and competitive landscape. “Profiting from the latter may be harder work, but it is important to understand that in the digital world this is the only route through which 8 billion people will gain and retain their liberty.”
The Labour Party conference highlighted the strong alignment between government and financial incumbents regarding identity and payment systems. Lucy Rigby MP, characterized digital assets and identity as integral components of the UK’s strategic infrastructure. Speakers emphasized the importance of interoperability and verification as essential pillars for the advancement of financial services. The inquiry regarding the potential for the Treasury to contemplate a strategic Bitcoin reserve to bolster the UK’s economic standing was posed directly to Lucy Rigby, yet it remained unanswered. Peter Kyle MP, stated that Britain should strive to establish the first trillion-pound business in the UK. His remark failed to acknowledge that Bitcoin is already established at that scale as a global asset class. The disparity underscores the existing policy gap. While certain ministers emphasize digital identity linked to payments as a means of control and verification, Bitcoin functions independently of that framework, accessible to anyone with a device and an internet connection.
Global instances illustrate the extent to which various nations are embracing Bitcoin. In the U.S., President Trump signed an executive order in March 2025 to establish a Strategic Bitcoin Reserve; the plan is to treat bitcoin held by the government as reserve assets, not simply liquidate them. Congress has since introduced the BITCOIN Act of 2025 to formalize and expand those policies, including the potential acquisition of up to one million BTC over five years. El Salvador has embraced Bitcoin as legal tender and maintains it as a reserve asset. These cases present policy avenues that the UK could explore, not necessarily to replicate, but to examine how sovereign Bitcoin exposure might be strategically utilized to foster growth and innovation. Ben Cousens, the UK’s first Bitcoin incubator and accelerator for startups, states, “Policy can be a lot more than just ‘buy bitcoin’.” The UK government has consistently highlighted its mandate for national renewal and growth—messages that resonate with us all. The key lies in facilitating and driving that growth, where creating a productive and favorable regulatory environment for businesses, along with sensible guidelines for consumers, should be of significant importance. “Growth comes from enabling and empowering those who create economic value, and Bitcoin has a 15-year track record of enormous value creation that the UK should participate in whole-heartedly.”
Britain, characterized by some of the highest electricity costs in Europe and possessing billions of pounds in sovereign bitcoin holdings, encounters both challenges and opportunities. Energy prices influence the outlook for energy-intensive sectors, including AI and bitcoin mining, which governments globally are linking to future growth. During the Labour Party conference, a representative from the Tony Blair Institute was questioned on how the UK might align its aspirations to become an AI and digital superpower with the burden of elevated energy costs. The response indicated that this remained ‘aspirational,’ highlighting the frequent disconnect between political ambitions and their practical implementation.
The disparity between promise and reality is clearly reflected in financial policy. On one hand, digital ID is heralded as a means of inclusion, while on the other, civil liberties groups caution against potential exclusion. On the other hand, there is bitcoin, with billions of pounds now held in government custody, permissionless and global. The petition opposing digital ID highlights the depth of public apprehension, while the ongoing court case verifies that bitcoin has become a state-controlled asset valued in the billions. Regardless of Britain’s acknowledgment, these holdings position it within the global competition to shape the future of currency, a competition where identity-linked systems and permissionless networks are diverging significantly. The outcome will significantly influence economic sovereignty for decades ahead.
