Crypto adoption is growing at a rapid rate, and the UK does not wish to be perceived as backward with regard to keeping up with global regulatory trends. This is especially evident in the UK Treasury’s recent Inquiry into the crypto asset industry. The government agency has reached out to the public to submit their views on use cases of crypto assets, especially as they pertain to risks and opportunities associated with the asset class.
The Treasury seeks to get the public’s view on crypto’s impact on social inclusivity
As published recently on an official page, the Committee has put Monday 12 September as the deadline for submissions. Apparently, the Treasury is looking to note the impact on social inclusivity crypto assets have, and if a modification in the current regulatory approach would be necessary.
In addition to ascertaining the risks and opportunities crypto brings to consumers, businesses, and the Government; the Inquiry seeks to cover the significance of distributed ledger technology (DLT) to the financial infrastructure of the country as well as get the public’s views on how regulatory measures can be balanced enough to protect users while creating a favorable environment that encourages innovation.
The Treasury notes that submissions are needed on emerging issues such as the potential role of a UK CBDC, the approach to taxation within the crypto space should the industry be widely accepted in the country, and the lessons the UK government can pick up from the measures other countries have taken to regulate crypto, and the public’s opinion on the efforts the UK government has put so far into promoting innovation in the crypto space.
The UK government is eyeing a UK CBDC
The UK Government has so far been putting a lot of effort into looking into the growing industry of blockchain and cryptocurrencies, and this recent Inquiry is a part of that. The BoE has for some time now indicated an interest in establishing a Central Bank Digital Currency (CBDC) in the country’s financial infrastructure.
The Bank of England and HM Treasury, in April of 2021, announced the joint inauguration of a Task Force focused on making research on how CBDCs can be explored to improve the financial system of the country.
Despite its interest in a CBDC, the BoE is still not completely resolute about the regulatory approach to take with regard to the broader crypto industry. In its Financial Stability Report of July 2022, the BoE noted that while digital assets do not currently pose any threat to financial stability, this is likely to change in the future if there is no regulatory framework to check growing adoption.