The UK government has reiterated its commitment to the country becoming a global crypto hub and is considering introducing a “digital pound”. That reports the BBC (opens in new tab) that Andrew Griffith, the Treasury’s economic secretary, told MPs that a public consultation on the proposed national currency will start within weeks.
The current government is conservative, but doesn’t seem very conservative on this, with Griffith telling the Treasury Select Committee: “I want us to set up a regime, and this is within the [Financial Services and Markets Bill]for the wholesale payment use of stablecoins”.
Stablecoins are crypto assets designed to have a fixed value that matches that of traditional currencies or other assets. It should be pointed out that, as with any crypto asset, stablecoins are capable of spectacular collapse: as we saw last year with Terra USD.
“Central banks around the world are developing or exploring digital currencies,” said Griffith, which is certainly true. “It is right to try to embrace potentially disruptive technologies, especially when we have such a strong fintech and financial sector.”
Disruptive, huh? Time to take out the bullshit bingo cards. Griffith would go on to talk about “job-changing technology,” and the intent to “turbocharge” existing financial industries. This may all have happened a few years ago, but after the disaster that was 2022 in crypto, many will view such language with skepticism.
However, much of the current focus is on regulation rather than diving, with the UK somewhat behind Europe in this area. It is unfortunately a function of Brexit, as the EU has created the world’s first comprehensive set of rules for regulating crypto markets, which are currently in the final approval process and will come into force in 2024.
Griffith acknowledged this and suggested that the UK’s rules could be broader and more transparent, whatever that means. There will be another public consultation on the future regulatory approach to crypto markets in the UK, although Griffith says they are in the “research and exploration” phase and puts a vague timeline of a few years when we might see results.
The UK’s “strong financial standing” means this will be “an activity with a long lead time,” Griffith said. “We want the right regimen, served right, that has the right balances in it.”
Given the UK government’s recent track record in managing everything from Covid to the current mass strike, I’m not hugely optimistic that they’ll do well with crypto: but hope is eternal. While the EU’s quicker action in regulating space clearly plays in the background here, the greater influence is likely to be the United States, where President Joe Biden gave orders to government agencies last year (opens in new tab) to start producing reports and researching regulation of crypto markets: as well as exploring the possibility of a “digital dollar”. Given the number of stablecoins pegging to the USD, I would actually like to see a government-issued digital dollar, if only for the sheer chaos of its introduction.