Iain McNicol, a Labour peer, is currently under scrutiny for his advisory role with Astra Protocol, a cryptocurrency firm, while also serving in a political capacity. His previous position as the general secretary of the Labour Party has raised questions about compliance with House of Lords rules regarding paid advisory roles.
Concerns Over Compliance
McNicol wrote to the UK Treasury in June 2023 on behalf of Astra Protocol, which was compensating him for his advisory services. This has raised significant concerns about whether he is violating House of Lords rules that prohibit peers from providing parliamentary services to organizations that pay them. Critics have called for urgent clarification from the House of Lords commissioners regarding potential violations of these existing rules.
Astra Protocol, a tech startup based in Dubai and Zurich, launched a cryptocurrency token that has since experienced a dramatic decline in value, dropping by 99.7% from its peak. McNicol’s involvement with the firm was publicly announced in January 2023, and his letter to the Treasury aimed to provide insights on regulatory matters, despite the consultation period having closed two months earlier.
Ethical Implications and Public Scrutiny
In his communication, McNicol highlighted Astra Protocol’s “esteemed team of industry veterans” and warned against regulatory measures that could stifle innovation in the decentralized finance (DeFi) sector. The ethical implications of his actions have been pointed out by critics, including the director of Unlock Democracy, who emphasize the need for transparency and accountability in the interactions between political figures and private firms.
Regulations state that members of the House of Lords cannot accept payment for influencing government officials or members of either house. While peers can take on paid roles, they must publicly declare these interests, although they are not required to disclose their earnings unless working for a foreign state.
McNicol’s Role and Responsibilities
In his letter, McNicol noted Astra Protocol’s unique ability to provide valuable insights into the challenges of regulating crypto assets. He acknowledged the late submission of his views, describing it as a “long shot,” but expressed hope that it would serve as useful background information for Treasury officials. His correspondence was released under Freedom of Information laws, raising further questions about the transparency of his actions.
Despite its ambitious goals, Astra Protocol has encountered significant challenges, with its cryptocurrency token losing nearly all its value by July 2023. By October 2023, McNicol had moved to a role on Keir Starmer’s frontbench in the House of Lords, a position he held until the general election in July 2024.
Continued Involvement and Defense
Although he claimed to have ended his paid consultancy role with Astra Protocol in September 2023, he continued to list the position on his register of interests, citing occasional strategic advice to the firm. A spokesperson for McNicol defended his actions, stating that he responded openly to a public consultation and made it clear that he was acting as a strategic adviser to Astra Protocol.
The firm, which rebranded to Astra Enterprise, has positioned itself as a fintech startup focused on developing tools for regulatory compliance in the cryptocurrency space. However, ongoing scrutiny of McNicol’s dual roles raises questions about potential conflicts of interest when political figures engage with private enterprises.
Impact on Public Trust
In May 2023, while serving on Starmer’s frontbench team, McNicol delivered a speech at the British Blockchain Association, discussing Labour’s plans for the fintech sector. During this address, he referenced his advisory role with Astra Protocol, emphasizing the importance of anti-money laundering (AML) technology. His speech, delivered in a virtual reality setting, underscored Labour’s commitment to ensuring that the UK remains competitive in the rapidly evolving fintech landscape.
The intersection of McNicol’s private interests and Labour’s policy initiatives has raised concerns, particularly regarding perceived conflicts of interest. Critics argue that such dual engagements could undermine public trust in political institutions, especially in an industry as volatile and scrutinized as cryptocurrency.
Need for Clear Guidelines
As the regulatory landscape for digital assets continues to evolve, the need for clear guidelines governing the interactions between political figures and private firms becomes increasingly urgent. The situation surrounding McNicol and Astra Protocol highlights broader concerns within the cryptocurrency industry regarding regulatory compliance and ethical governance.
As governments worldwide grapple with how to regulate digital assets, the actions of political figures can significantly influence policy direction and public perception. The potential for conflicts of interest, particularly when financial incentives are involved, necessitates a careful examination of the rules governing political engagement in the fintech sector.
📎 Related coverage from: theguardian.com
