UK Govt has no plans to designate digital currencies as financial instruments

Maria Nikolova

“The Government currently has no plans to recognise digital currencies as legal tender or to propose designating them as financial instruments”, says John Glen.

The UK Government continues to face an increasing volume of questions regarding Bitcoin and its likes. Norman Lamb, of North Norfolk, has asked whether the Government plans to recognise digital currencies as (a) legal tender and (b) as a financial instrument.

In a reply to this question, John Glen, Economic Secretary to the Treasury and City Minister, on Wednesday said that:

“The Government currently has no plans to recognise digital currencies as legal tender or to propose designating them as financial instruments”.

Less than a week ago, John Glen clarified the stance of the Bank of England regarding digital currencies. He said back then that the Bank does not currently plan to issue a central bank-issued digital currency. However, he said, the Bank is undertaking research to better understand the implications of a central bank issuing a digital currency.

On February 22, 2018, the UK Treasury Committee opened a new inquiry into digital currencies and distributed ledger technology (DLT). The inquiry aims to explore the role of digital currencies in the UK, including the opportunities and risks that digital currencies may generate for consumers, businesses, and the Government. It will also examine the potential impact of DLT – such as blockchain – on financial institutions, including the central bank, and financial infrastructure.

Earlier in February, Lord Bates stated that “the Government has no plans at this time to put an age limit on trading or investing in digital currencies.”

He added that the Government recognises the significant benefits that digital currencies and the related technology could bring, as well as potential challenges. The Government is monitoring the situation, and believes any regulation should be proportionate and risk-based, he said.

The Financial Conduct Authority (FCA) has been cautious with regard to cryptocurrencies. In January this year, the regulator issued another warning against risky investment products including Bitcoin and its likes.

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