This can only end well.
The UK government has reiterated its commitment to the country becoming a world crypto hub, and is considering the introduction of a “digital pound”. The BBC reports that Andrew Griffith, the economic secretary to the treasury, told MPs that a public consultation on the proposed national currency will launch within weeks.
The current government is Conservative but it doesn’t seem very conservative about this, with Griffith telling the Treasury Select Committee: “I want to see us establish a regime, and this is within the [Financial Services and Markets Bill], for the wholesale use for payment purposes of stablecoins”.
Stablecoins are a crypto asset designed to have a value fixed to that of traditional currencies or other assets. It should be pointed out that stablecoins, as with every crypto asset, 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 look to seek to embrace potentially disruptive technologies, particularly when we have such a strong fintech and financial sector”.
Disruptive, eh? Time to get the bullshit bingo cards out. Griffith would go on to talk about “game-changing technology”, and the intention to “turbocharge” existing financial industries. All of which may have passed muster a few years ago but, after the disaster that was 2022 in crypto, many will be viewing such language with scepticism.
A lot of the current focus however is regulatory rather than on diving in, with the UK somewhat behind in Europe in this area. It’s a function of Brexit unfortunately, because 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 due to come into effect in 2024.
Griffith acknowledged these and suggested the UK’s rules could be broader and more transparent, whatever that means. There will be another public consultation on the UK’s future regulatory approach to crypto markets, though Griffith says they’re in the “research and exploration” phase and put a vague timeline of a few years on when we might see any results.
The UK’s “strong financial reputation” means this will be “a long lead-time activity,” said Griffith. “We want the right regime, operated in the right way, that has the right balances in it”.
Given the UK government’s recent track record of managing everything from Covid to the current mass strike action, I’m not wildly optimistic that they’ll get it right on crypto: but hope springs eternal. While the EU’s swifter action in regulating the space clearly sits in the background of this, the bigger influence is arguably the United States, where President Joe Biden last year ordered government agencies to begin producing reports and looking into regulation of crypto markets: As well as exploring the possibility of a “digital dollar”. Given the number of stablecoins that peg themselves to USD, I’d actually like to see a government-issued digital dollar, just for the absolute chaos of its introduction.
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