The United Kingdom remains committed to becoming a world crypto industry hub in spite of the recent negative events that have occurred on the market. It is “the sector I have dedicated the most time to,” Member of Parliament and HM Treasury Economic Secretary Andrew Griffith told a meeting of the UK Parliament Treasury Committee on Jan. 10, underscoring that commitment.
The introduction of a wholesale stablecoin and the Financial Markets Infrastructure (FMI) sandbox will be next steps in the process. Those elements are included in the Financial Services and Markets (FSM) bill, which will have its second reading in the House of Lords also on Jan. 10.
A stablecoin will likely serve as a “first use case of what is likely to be a wholesale settlement coin” in the “long runtime” leading up to the potential introduction of a central bank digital currency (CBDC), Griffith said.
Griffith defended the work being done on the wholesale stablecoin, saying stablecoins are “here now” and therefore in need of immediate attention. He noted that it is unclear whether a CBDC would displace private stablecoins on the market if a CBDC were introduced.
A retail British CBDC, if one were to be introduced, would be an anonymized and intermediated platform by design, Griffith said.
Related: UK pushes crypto efforts forward through financial services reforms
A consultative paper on CBDC will appear “in weeks, not months,” to be followed by a another on crypto regulation more broadly. The government will also hold at least six roundtables with the crypto sector this year.
It is “not the government’s position that this [crypto-based technology] is an inevitability,” Griffith said, but he added that current technology cannot solve issues in the financial sector such as settlement time “in a disruptive way,” as blockchain technology can.
The @CommonsTreasury Inquiry in to #Cryptoassets continues today with another oral evidence session. This time including Andrew Griffith MP, Economic Secretary.#crypto #cryptoregulation #cryptoinquiry
— CryptoUK (@CryptoUKAssoc) January 10, 2023
For retail users, Griffith drew a clear line between crypto as an investment and as a means of payment. Unbacked cryptocurrency may “find a role or not in the market,” Griffith held.
Crypto-based payment methods are an issue for digital and financial inclusion, but “there is a very strong commitment to the continued use of and access to cash,” in which banks continue to have a place. Griffith said:
“Removing that intermediary, certainly at the current evolution of the market, feels very premature.”
The FSM bill, which may “be done by Easter,” will also enable the licensing of some new payment apps in the FMI sandbox and their introduction onto the market. The use cases for crypto-based wholesale fintech may be in ledgers and registers “in the middle office” for now, Griffith said.
Full regulation of crypto asset markets will not be achieved in 2023, Griffith assured a committee member. Legislation will adhere to the principle of “same asset, same regulation.”
In the interim, oversight of crypto promotions is playing an important role in consumer protection. Consumers can look for the Financial Conduct Authority (FCA) logo on promotions to know they are dealing with a regulated organization. Treasury deputy director of payments and fintech Laura Mountford told the committee.
Be that as it may, only about 40% of consumers “understand or consider that they are buying crypto assets as a gamble,” Mountford said, citing FCA monitoring.