LONDON – The United Kingdom government is considering the launch of a digital version of the national currency, known as a digital pound, as it remains committed to becoming a cryptocurrency hub, Economic Secretary to the Treasury Andrew Griffith told lawmakers. A public consultation on the attributes of a digital pound will be launched in the coming weeks, he said, speaking to the parliamentary Treasury Select Committee.
Digital Pound Raises Public Policy Issues
Griffith stated that a digital pound raises many public policy issues and the government has to “get them right.” He addressed concerns that a state-backed coin could erode privacy, insisting that its design would not allow the authorities to track individual transactions beyond measures targeting crime like money laundering.
CBDC to Start With Wholesale Settlements
The Economic Secretary further elaborated that the first use case for a central bank digital currency (CBDC) issued by the Bank of England would likely be in wholesale settlements but admitted that a privately issued, fiat-backed stablecoin “would probably get there first.”
“I want to see us establish a regime, and this is within the FSMB, for the wholesale use for payment purposes of stablecoins,” the minister added referring to the Financial Services and Markets Bill, which is currently being debated in the British Parliament.
UK Regulations Could Be Broader Than EU
Andrew Griffith also revealed that another consultation will be initiated on the U.K.’s regulatory approach toward crypto assets in general. While the EU has already agreed on a set of comprehensive rules for the market expected to come into force in 2024, the minister pointed out that the U.K. regulations could be even broader and include decentralized finance.
“We want the right regime, operated in the right way, that has the right balances in it,” he told the members of the committee while vowing to hold multiple roundtables with industry participants as part of the discussions.
Crypto Winter Shines Spotlight on Consumer Protection
Andrew Griffith’s statements come after last year’s slump in the valuations of major cryptocurrencies like bitcoin and the following the collapse of large market players such as crypto exchange FTX. Amid an ongoing crypto winter, consumer protection in the space has come under scrutiny, the reports noted.
The U.K government is actively seeking ways to create a conducive environment for the cryptocurrency and blockchain ecosystem to thrive. The launch of a digital pound and the initiation of consultations on regulations is a step in the right direction as the country continues to position itself as a crypto hub.