The British government is exploring the launch of a digital currency to maintain its status as a leading crypto hub and to regulate stablecoin transactions.
UK Weighs Up Digital Pound
The UK Treasury has indicated that it is looking into the possibility of issuing a digital version of the national currency. Treasury Economic Secretary Andrew Griffith told members of the Treasury Select Committee that a consultation would be opened soon to discuss the various attributes and applications for the digital pound. He commented:
The consultation will be framed as an “if” and not a “when”. We are not committed to this.
Griffith went on to state that there are several issues to consider before introducing a state-backed cryptocurrency, and that privacy must be taken into account. He said that it would not be designed to allow the government to track transactions beyond those related to money laundering and other crimes.
The initial use case for a Bank Of England CBDC likely be in wholesale transactions, with private-issued fiat-backed digital currency also on the cards. “I want us to establish a regime, and this is within the FSMB, for the wholesale use for payment purposes of stablecoins,” the minister stated, referring to the Financial Services And Markets Bill.
UK Could Go Beyond EU Crypto Regulations
Andrew Griffith also mentioned that another consultation would be held regarding the UK’s overall regulatory approach to crypto assets. While the EU has established a comprehensive set of rules that are due to come into effect in 2024, he suggested that the UK could go further and include decentralized finance. “We want the right regime, operated in the right way, with the right balances,” he said, adding that industry players would be invited to participate in the discussions.
The minister’s comments follow a decrease in the value of major cryptocurrencies like bitcoin last year, and the failure of major market players like FTX exchange. Amid ongoing crypto winter, consumer protection has been under review.
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