UK government Is Set to Introduce a National Cryptocurrency
The UK Treasury is considering a digital pound plan and cryptocurrency that affect everyone
Andrew Griffith stated that the UK was committed to becoming a global crypto hub. And the government was a long way down the road to establishing a regime for the wholesale use, for payment purposes, of stablecoins. Stablecoins are intended to have a consistent value that is linked to traditional currencies or assets such as gold.
The currency, which would be used by households and businesses, would coexist with cash and bank deposits rather than replace them. ‘Game-changing technology,’ as the phrase goes.
Mr. Griffith told the Treasury Select Committee that a public consultation on the characteristics of a digital pound would be launched in the coming weeks. “I want to see us establish a regime, and this is included in the FSMB [Financial Services and Markets Bill, which is currently being debated in Parliament], for the wholesale use of stablecoins for payment purposes,” he said. Digital currencies are being developed or explored by central banks worldwide.
China, for example, is a global leader in this race and is currently testing a digital yuan in major cities such as Beijing, Shanghai, and Shenzhen. In July 2021, the European Central Bank took the first step toward launching a digital version of the euro, launching a 24-month investigation phase followed by three years of implementation. “It is right to seek to embrace potentially disruptive technologies, particularly when we have such a strong fintech and financial sector,” Mr. Griffith told the committee. He wanted to give this “potentially disruptive game-changing technology that can challenge but also turbocharge all of those [financial] industries” a chance.
Consumer safeguards
The “crypto winter,” a rapid drop in the value of Bitcoin and other assets, has raised questions about whether any cryptocurrency can ever be considered stable. It also has the potential to raise a slew of public-policy concerns. Public consultation on Britain’s first general regulatory approach to crypto assets, a sector where consumer protection has been scrutinized in recent weeks, will also occur.
The consultation, however, will be part of a “research and exploration” phase that will assist both the Bank of England and the government in developing the plans over the next few years.
Given the UK’s “strong financial reputation,” Mr. Griffith told the committee that being right was more important than being first when it came to regulating cryptocurrency. “It will be a lengthy process,” he said. The EU has issued the world’s first comprehensive rules governing cryptocurrency markets. They are expected to be finalized in the coming weeks and go into effect in 2024. Mr. Griffith stated that the UK rules could be expanded to include decentralized finance and that greater transparency would benefit everyone. “We want the right regime, operated correctly, with the right balances,” he told the committee.
He also committed to holding “at least” six roundtables with those in the crypto industry, to “expose us as regulators and decision-makers”.
