UK Govt not making any assessment of consequences of recent cryptocurrency value swings
Lord Bates explains that the UK Government has not made any formal evaluation of the implications of recent changes in cryptocurrency prices.
The UK Government continues to face questions regarding cryptocurrencies and the effects they might have on certain sectors of the economy.
The latest such question was posed by Lord Taylor of Warwick, asking “Her Majesty’s Government what assessment they have made of reports that the value of crypto-currencies in the United States is falling, and of the potential effects that such a decline might have on the UK blockchain industry”.
The answer by Lord Bates, Minister of State at the Department for International Development, indicates that not much has been done in this respect. Lord Bates said:
“The Government has not made a formal assessment of any potential implications of recent changes in the value of cryptocurrencies. However, the Government continues to monitor developments in the cryptocurrency market”.
Lord Bates reminds that the Chancellor of the Exchequer launched the Cryptoassets Taskforce in March, consisting of HM Treasury, the Bank of England and the Financial Conduct Authority. The Taskforce is considering the risks and potential benefits of cryptoassets and other applications of distributed ledger technology in financial services, as well as assessing what, if any, regulation is required in response. The Taskforce is set to publish a report in the Autumn.
Less than a week ago, John Glen, Economic Secretary, HM Treasury, explained that the Chancellor had not had any formal discussions with the Bank of England about a state-backed digital currency.
He noted that whereas the Bank of England was not planning to create a central bank-issued digital currency, it had been carrying out research to understand any potential implications.
Those remarks were made after John Glen had to answer to similar enquiries in March this year. Back then, he said that the Government “currently has no plans to recognise digital currencies as legal tender or to propose designating them as financial instruments”.
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.
There is no regulation of digital currencies in the UK apart from regulation of certain products related to them, like CFDs based on cryptocurrencies.
