UK Economic Secretary brushes off question about Facebook’s Libra

Maria Nikolova

The Government does not comment on the proposed business models of individual companies, John Glen said.

Facebook’s launch of its own cryptocurrency might have made a splash in some business circles but UK politicians seem to be unimpressed with these developments. John Glen, Economic Secretary to the Treasury, has brushed off a question about the launch.

The question was:

“To ask the Chancellor of the Exchequer, what assessment he has made of the potential effect of plans by Facebook to launch its own crypto-currency, Libra, on the stability of the financial system”.

Today, John Glen answered that the Government does not comment on the proposed business models of individual companies.

He added that the Government established the Cryptoassets Taskforce – comprised of HM Treasury, the Financial Conduct Authority and the Bank of England – to explore the risks and potential benefits associated with cryptoassets and other applications of distributed ledger technology.

The Taskforce’s final report found that cryptoassets do not currently pose a material threat to UK or global financial stability, however this could change in the future, and the Bank of England’s Financial Policy Committee will continue to monitor the situation.

Treasury Ministers have meetings with a wide variety of organisations in the public and private sectors, as well as international counterparts, as part of the process of policy development and delivery, John Glen added.

Let’s recall that, earlier this year, the UK Financial Conduct Authority (FCA) published two pieces of research looking at UK consumer attitudes to cryptoassets.

The qualitative research indicated some potential harm, including that many consumers may not fully understand what they are purchasing. Despite this lack of understanding, the cryptoasset owners interviewed were often looking for ways to ‘get rich quick’, citing friends, acquaintances and social media influencers as key motivations for buying cryptoassets.

Both the survey and qualitative research found that some cryptoasset owners made their purchases without completing any research beforehand.

The FCA has previously warned that cryptoassets, including Bitcoin for instance, are highly volatile and risky. Many tokens (including Bitcoin and ‘cryptocurrency’ equivalents) are not currently regulated in the UK. This means that the transfer, purchase and sale of such tokens currently fall outside our regulatory remit. Hence, it is unlikely that consumers will be entitled to make complaints to the Financial Ombudsman Service or protected by the Financial Services Compensation Scheme if things go wrong.

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