Ryan, who joined from Sunderland last summer, has endured an injury-hit season and struggled to establish himself in the side.
But his fleeting appearances endeared him to fans, due to an exquisite range of passing, and many supporters on the Iron-Bru.net messageboard felt he should have been offered a contract to stay.
But Laws told the official website: "The one that saddens me a little bit more than most is Ryan, who we had high hopes for at the beginning of the season and he had done well in a period of the season.
"But he wants to play regularly, he needs regular football, and I can't give him that. I'm making the decision for his future as much as anything else.
"He needs games and I think it will benefit him if he goes somewhere else where he can play 30 or 40 games, that's the question mark that we had over him."