Building Societies Act 1986 (Amendment) Bill

Lisa Cameron Excerpts

Report stage
Friday 19th April 2024 Commons Chamber

[Dr Lisa Cameron (East Kilbride, Strathaven and Lesmahagow) (Con)]

I place on record my thanks to the hon. Member for Sunderland Central (Julie Elliott) for bringing a pragmatic and important Bill to the House, and I give it my full support today. As always, she works assiduously in making lives better for people across the United Kingdom and in her constituency, and she works in an extremely positive manner across parties to achieve her aims, and I thank her for that, too.

As others have mentioned, building societies are extremely important to the fabric of the financial institutions in our constituencies. I make regular visits to the Nationwide Building Society branch in East Kilbride, as I did just a few months ago. Like my hon. Friend the Member for Milton Keynes North (Ben Everitt), I was reassured to find out that my local branch had no plans to close and was thriving in the community. Many people were coming in to speak and to chat, as well as for socialisation and reassurance regarding finance and debt and how to engage with the new digital banking sector. The reach-out into the community is second to none.

I was impressed by that, particularly as I have had terrible news from East Kilbride just this week that the Royal Bank of Scotland is closing its branch there. That follows on from the bad news just last month that the Bank of Scotland is closing in Strathaven and Lesmahagow, leaving those communities without essential banking, particularly as those branches are the last banks in those local communities. It is distressing for the residents. I am pleased to be able to raise their concerns today and to praise Nationwide for the work it is doing and its assurance that it wants to be at the heart of our community for the foreseeable future.

I declare a personal interest, as my first mortgage was with that building society. I did not know an awful lot about finance or mortgages at the time, but Nationwide took the time to go through the different options with me, and I felt reassured by the manager. Having that face-to-face contact is so important. For first-time buyers who are not sure about the steps to take in getting their first mortgage—it is such a pivotal part of our life journey—these institutions play such an important role in our local communities.

I also place on record my thanks for the work that Nationwide is doing on mental health. I am part of the Money and Mental Health Policy Institute, chaired by Martin Lewis. We know that there is a huge link between mental health and finance. Debt, in particular, correlates with people’s mental health spiralling downwards, and we need to make sure we address those issues through all our banking institutions.

As has already been said, this is an important Bill, which places building societies on par with banks for corporate governance and solvency, and will keep them competitive and at the heart of our communities for the future.

[Madam Deputy Speaker (Dame Eleanor Laing)]

I call the shadow Minister.

Oral Answers to Questions

Lisa Cameron Excerpts

Tuesday 19th December 2023 Commons Chamber

[Laura Trott]

My right hon. Friend is right, and she nailed the delivery of her question while out of breath.

At the autumn statement, the Chancellor announced measures that demonstrate the Government’s ongoing commitment to renewable energy as a priority growth sector essential to our energy security and net zero ambitions. The announcements made include a new investment exemption from the electricity generator levy and a £960 million green industries growth accelerator.

[Dr Lisa Cameron (East Kilbride, Strathaven and Lesmahagow) (Con)]

T1. If he will make a statement on his departmental responsibilities.

[The Chancellor of the Exchequer (Jeremy Hunt)]

Today is the funeral of Lord Darling, who will be greatly missed by many in this House, as well as by Maggie and his family. Civil servants are known for being good at concealing their private feelings about more challenging Ministers, but that was never necessary with Alistair Darling. He was Chief Secretary to the Treasury and then Chancellor during the global financial crisis, and despite the many stresses and strains of that period, he was uniformly admired and much loved for his kindness, decency and dry sense of humour. He took decisions in that period that have stood the test of time and put him on the small list of Chancellors whom history will remember for wise decision making in an unprecedented crisis. We will always remember him.

Finally, Mr Speaker, may I wish you and all the staff in the House a merry and peaceful Christmas?

[Dr Cameron]

I, too, send my full sympathy. I also wish everyone across the House a merry Christmas.

Industry has fully supported the Prime Minister’s vision of the UK becoming a cryptocurrency hub, but many licensed companies are still finding it difficult to open bank accounts here. So will the Chancellor meet the all-party group on crypto and digital assets to discuss what progress can be made on digital Britain?

[Jeremy Hunt]

I am grateful to my hon. Friend for asking that question, because the UK, and London in particular, has become the global crypto hub. To make sure that the market can really take off in the way that was intended—in a responsible way—we need to regulate it, which is why we have introduced regulations on stablecoins and on the promotion of crypto services. My hon. Friend the Economic Secretary to the Treasury would be more than happy to meet her.

Public Sector Pay

Lisa Cameron Excerpts

Thursday 13th July 2023 Commons Chamber

[John Glen]

I thank the hon. Gentleman for his question. I think he welcomes what we have decided to do with the 6.5% pay increase, which leaves a typical teacher with £44,300. We are reprioritising within the Department for Education’s existing budget to deliver the additional funding to schools, but we are protecting core schools funding and frontline services. We have put in additional sums of money through the spending review and subsequent fiscal events: £330 million in 2023-24 and £550 million in 2024-25. The numbers add up, and he will recognise that.

[Dr Lisa Cameron (East Kilbride, Strathaven and Lesmahagow) (SNP)]

I recently joined the Public and Commercial Services Union at East Kilbride’s Centre One tax office for its campaign on fair pay. Many told me that they were struggling on minimum wages. We have dedicated public servants who, with the cost of living, are struggling to make ends meet. Does the Minister share my concern that much more must be done to secure a fair pay deal that is acceptable to those who are working on the frontline?

[John Glen]

I say respectfully to the hon. Lady that we have taken a number of interventions and made a number of decisions across the board, and that does not just mean a single percentage—I set out the percentages across different workforces in some detail—and sometimes, such as within education, those distributions are designed to give more uplift to those at the lower levels. I am happy to correspond with her on anything specific that she wants to bring to my attention, obviously within the devolution framework.

Cryptocurrency Regulation

Lisa Cameron Excerpts

Tuesday 13th June 2023 Westminster Hall

[Dr Lisa Cameron (East Kilbride, Strathaven and Lesmahagow) (SNP)]

I beg to move,

That this House has considered the regulation of cryptocurrency.

It is a pleasure to serve under your chairmanship for the first time, Mrs Harris, and to see you in your rightful place.

As chair of the crypto and digital assets all-party parliamentary group, I am delighted to be able to talk about the potential of the UK cryptocurrency and digital asset sector, and the need for clear regulation to protect consumers, which should be at the core of everything we do, and to support investment.

Just over a year ago, in April 2022, the UK Government set out their landmark vision to make the United Kingdom the global hub for cryptocurrency investment, committing to creating the right conditions for cryptocurrency and digital asset businesses to set up and scale up in the UK. Shortly afterwards, in August 2022, the APPG launched an inquiry to better understand the opportunities that a regulated industry could bring to the UK, as well as the challenges and potential barriers for Government in making their vision for the UK a reality.

Just last week, we published our report “Realising Government’s vision for the UK to become a global hub for cryptocurrency & fintech innovation”. Our inquiry looked at a number of key areas, including the potential for the UK to be a global hub for investment; the UK’s approach to regulation and the role of UK regulators in consumer protection; the potential offered by central bank digital currencies; and the risks of economic crime. We heard views from operators, regulators, industry experts and the general public—the Advertising Standards Authority, Innovate Finance, the City of London Corporation, the Payment Systems Regulator, the Royal United Services Institute, the Law Commission and many others—on the need for regulation of this ever-growing sector. I put on the record my thanks for their input and help in formulating our recommendations.

The APPG’s report is the first on cryptocurrency and the digital assets industry compiled jointly by MPs and Members of the House of Lords, and I thank colleagues in both Houses for their invaluable contributions. We set out more than 50 recommendations, which we hope will establish a foundation for further discussion. The Minister will be pleased to hear that I will not go through them all today, but I will focus on some of the report’s key findings.

It is clear from our work so far that the growth of cryptocurrency and digital assets presents a number of potential opportunities and that the UK is well placed to realise them, but that will require cross-Government strategic planning.

[Jim Shannon (Strangford) (DUP)]

I commend the hon. Lady for securing the debate—we have become good friends in the House—and I thank her for all she does on this topic. Reports in 2019 indicated that Colu, a tech firm based in Israel, had developed a potential new cryptocurrency for Belfast City Council. There has been much discussion in this place of how cryptocurrency will be regulated across the UK. Does she agree that for the United Kingdom to become a leading force in crypto, regulation must be UK-wide, led centrally from Westminster, and that UK-wide discussion is the only way to achieve safe regulation?

[Dr Cameron]

I thank the hon. Member for his contribution. Yes, much of this will be led by the Treasury, and I imagine that regulation will be streamlined right across the United Kingdom. I am pleased to hear about developments in Northern Ireland; there have been many in Scotland, too. I spoke to Scotcoin not that long ago. This area has enthused and motivated people right across the United Kingdom, and it is important that we collaborate in order to realise its potential.

[Alun Cairns (Vale of Glamorgan) (Con)]

It is a privilege to serve under your chairmanship for the first time, Mrs Harris. I congratulate the hon. Lady on her work with the crypto and digital assets all-party parliamentary group and on its excellent report; it is a privilege to work with her. Some years ago, the UK became the world’s leading fintech centre because the regulatory environment was established with a clear direction from Government, which allowed businesses to invest and regulators to lean positively towards the sector’s development. Does she agree that if the positive record of the Government of that time is replicated with cryptocurrency, the UK will have a similar opportunity to be a leading nation in this sector, as well as in other financial technologies?

[Dr Cameron]

I thank the right hon. Member for his valuable contribution. I totally agree. I saw some research from PitchBook last month that suggested that since the EU produced its regulatory framework on markets in cryptoassets—MiCA—investment in the EU has increased substantially. With a regulatory pathway over the next 12 to 18 months at the maximum, the UK could harness a leadership position in this sector. That will be essential because of the digital revolution that is happening. The next generation is a digital generation already. This is the way that things are moving in the world, and the UK must be at the forefront. I am pleased that the Minister is harnessing his skills and endeavours to ensure that happens.

We heard that without comprehensive regulation there are considerable risks in the industry, particularly regarding consumer protection, economic crime and financial stability, which I will speak about later. While there are clearly legitimate concerns about the potential risk posed by cryptocurrency and digital assets, it is important to acknowledge a number of positive use cases that show the potential benefits of the new technology.

One such example is the use of cryptocurrency at the frontline of the conflict in Ukraine. Many may not know this, but following the Russian invasion, the Ukrainian Government appealed for cryptocurrency donations and received millions of dollars in cryptocurrency to support military and humanitarian efforts on the frontline. Ukraine’s Deputy Minister of Digital Transformation, Alex Bornyakov, has said that cryptocurrency has been “essential” to Ukraine’s response to the Russian invasion. I am delighted to welcome Minister Bornyakov and his team, who are in the Public Gallery. We are delighted to have them here today.

Our inquiry heard that the growth of the sector suggests that cryptocurrency is here to stay. The latest research by the Financial Conduct Authority shows that cryptocurrency ownership has almost doubled in the last year, with almost one in 10 people surveyed owning cryptocurrency in 2022. That highlights the need for proper, clear regulation to protect consumers and support the industry’s growth in a reasonable way. As countries around the world move quickly to develop regulatory frameworks, we feel that the UK must move within the next 12 to 18 months to harness the industry’s potential in order not to lose out to other jurisdictions.

Throughout our inquiry, we heard that there are potential barriers to the UK’s realising its vision, which we set out in the report. We heard that the process for cryptoasset businesses to enter the UK is very lengthy, with limited engagement at times, and that many businesses ultimately choose to invest outside the UK. While the Government have said that they are open for business and for companies in the sector to set up and scale up, we heard that that has not been the experience of many companies seeking to obtain licences to operate in the UK. They have seen very lengthy delays and, in many cases, had their applications rejected. That is fine, because we do not want a race to the bottom, but it often happens without a clear explanation and with limited communication throughout the process.

To date, only 41 firms have been approved to operate in the UK. Will the Minister say what more the Government can do to ensure that legitimate and responsible firms that want to set up and scale up here are able to do so? What steps are the Government taking to ensure that regulators have the resources they need to deliver on their responsibility to process applications?

[Martin Docherty-Hughes (West Dunbartonshire) (SNP)]

It is good to see you in the Chair, Mrs Harris, and I congratulate my hon. Friend on securing the debate. On regulation, my hon. Friend mentioned risks, and does she agree that the Government need first to admit that when it comes to crypto there is a lot of risk? We know there is a lot of risk—it is called fraud, so fraud regulation should be used in the first instance before they introduce other regulation. There needs to be a recognition that fraud is fraud, whether it is related to crypto or anything else.

[Dr Cameron]

I thank my hon. Friend for raising those important issues. There is a section in my report on fraud and scam risks to consumers, so he has pre-empted the latter part of my speech, but I will cover his points in full.

Another area of concern is access to basic financial services. To be a hub of cryptocurrency—of innovation, scale-ups and start-ups—companies need to be able to open a bank account and pay their employees. The inquiry heard that firms were struggling to secure access to UK banking services. A high proportion of banks have refused to provide bank accounts to digital assets firms, even when those firms are regulated and licensed to operate in the UK. In addition, just in recent months, a number of major banks have also announced limits on transactions, making it more difficult rather than less.

Such services are absolutely necessary for companies to operate regulatorily compliant businesses. The inquiry heard that that could be one of the single biggest barriers to growth and innovation for the UK. There are concerns that this could fundamentally undermine the Government’s ambition for the UK to become a global cryptocurrency hub and could be a barrier to growth and innovation in the digital sector.

I recently chaired a roundtable with the industry to hear more about their concerns. What more can the Government do to help find a way forward and to ensure clear pathways for firms to access fundamental banking facilities when they are operating legitimately and robustly within the guidelines? Will the Government consider using their powers to help facilitate meaningful dialogue between the banking and digital assets sectors to find a way forward that works for both?

We also heard strong support for the Government’s current approach of regulating cryptocurrency in line with financial services regulations; when we look at the research and the details, we can see that that offers the best and most robust protections for consumers. In that sense, my report supports the Government’s position on financial services regulation.

There is another issue. I worked in the health service and I am keen that people who make gains in the UK should pay their taxes. A regulatory framework in financial services enables the Exchequer to collect taxes, as opposed to using the gambling regulations, which would not allow for that. It is also important that the UK sets regulations within financial services to position itself in collaboration with other jurisdictions internationally and rather than appear an outlier by using other regulatory frameworks.

Our inquiry heard serious concerns about the risks to consumers from fraud and scams associated with the sector. As with all new and emerging technologies, the sector has the potential to be exploited by criminals. We heard that given the rapid pace of growth and consumer adoption, the risks in this area cannot be ignored, particularly if the UK wants to position itself as the global home of investment. Consumer protection measures must be at the core of everything that the Government do. We must mitigate the risks associated with new developments in the sector.

Research from the FCA in 2021 showed that overall public awareness and ownership of cryptocurrency had increased, but it also showed that

“the level of understanding of cryptocurrencies is declining, suggesting that some users may not fully understand what they are buying”.

Consumer research by the Financial Services Compensation Scheme highlighted the low levels of understanding and the need for much greater financial education. Industry and the Government must partner to help raise awareness. We want a joined-up and co-ordinated approach, including industry, regulators, law enforcement and the Government, to clamp down on scams.

Before I conclude, let me briefly mention that the Government are making great strides with the consultation on a central bank digital currency, and we support the progress being made. I have also heard about improvements throughout industry on the sustainability of bitcoin mining and so on. That is very important because we must realise that we are in a climate crisis, and all innovations and new technological developments should contribute to net zero.

For our report, we heard about the need for a joined-up, co-ordinated approach across all Departments, and we have said that Government might consider the appointment of a crypto tsar, who could help to co-ordinate across Departments and support the Minister to ensure a consistent approach. Will the Minister update the House on the Government’s vision for the UK to become a global hub? I realise that yesterday the Prime Minister made a very important speech that contributes to the debate and I would be delighted to hear what more we can do, as the all-party parliamentary group, to support the Minister in his endeavours. We feel that things have been extremely positive, but there is a need to move at pace within the next 12 to 18 months.

Digital Pound

Lisa Cameron Excerpts

Tuesday 7th February 2023 Commons Chamber

[Andrew Griffith]

I accept that the Command Paper has just been published, but when my hon. Friend has the opportunity, he will be able to look at the detail of the operation of such a scheme, which will reveal that there will be platform intermediaries. People will not have a bank account directly with the Bank of England, except in very narrow circumstances. I understand the concerns, and it is right that we debate the balance between freedoms and our duty to protect citizens from fraud and other things that this House, from time to time, will decide justify the piercing of that veil of privacy.

I want to reassure my hon. Friend on cash. By design, this proposal will not replace cash. From a monetary policy perspective—although that is something, as with all these questions, that Members may respond to during the consultation—it is envisaged that it certainly will not increase money supply, and the one-for-one nature I talked about earlier is important in that regard. To be clear to my hon. Friend, the arbiter of that decision will be individual citizens making the choice as to how they wish to use their money—how they wish to spend it and how they wish to store it.

[Dr Lisa Cameron (East Kilbride, Strathaven and Lesmahagow) (SNP)]

The crypto and digital assets all-party parliamentary group, which I chair, greatly welcomes the consultation and the progress being made by the Minister. We are hopeful that a digital pound could enable faster payments and lower cost payments to improve inclusion across the UK. The other issue I wish to raise is international interoperability, in particular with colleagues across the Commonwealth. Will the Minister look at what progress can be made in the realm of collaboration with Commonwealth partners?

[Andrew Griffith]

I thank the hon. Lady for her question and for her work as chair of the crypto and digital assets APPG. I hope it has been a productive number of weeks with the consultation paper on the regulation of cryptoassets and today’s joint consultation paper with the Treasury. The APPG does good work in educating and providing opportunities for Members of this House to engage with this rapidly growing area, which is important to financial inclusion and ensuring that we design in financial inclusion at the start.

The hon. Lady makes a very important point about international interoperability. About 90% of all member countries of the Bank for International Settlements surveyed are looking at doing something similar, so it is right that we engage. We have a strong position of leadership in the financial community, as well as an adherence to the highest quality regulatory standards. That is absolutely in keeping with what we are trying to achieve today.

Cryptocurrency Regulation

Lisa Cameron Excerpts

Wednesday 25th January 2023 Westminster Hall

[Esther McVey (in the Chair)]

I will call Dr Lisa Cameron to move the motion and then call the Minister to respond. As is the convention in 30-minute debates, there will not be an opportunity for the Member in charge to wind up,.

[Dr Lisa Cameron (East Kilbride, Strathaven and Lesmahagow) (SNP)]

I beg to move,

That this House has considered regulation of cryptocurrency.

It is a pleasure to serve under your chairship today, Ms McVey. As Chair of the crypto and digital assets all-party parliamentary group, I am delighted to be able to raise this important sector of innovation. I thank the Minister for taking the time to respond today.

This is not the first time that cryptoassets have been debated in the House of Commons. Over the last 12 months, there has rightly been increased interest in the growth of the sector from the media and from colleagues in all parties across this House and the House of Lords. I am pleased by the increased interest, particularly in the work that we have been doing to bring ourselves up to speed with the sector. We have found that millions of people in the United Kingdom already own some form of cryptocurrency, yet there has not been as much discussion about it as was needed, particularly in terms of regulation.

Regulators around the world are now racing to develop their own frameworks for crypto. Recently, the European Union developed its markets in cryptoassets regulation—MiCA—and I look forward to hearing more about that with the all-party parliamentary group in the months to come. Whether people voted for Brexit and agree with it or not, it is where we are, and the UK has an opportunity to create its own bespoke regulatory framework for cryptocurrency.

Recent events, such as the collapse of the crypto exchange FTX, have focused minds and highlighted the importance of ensuring that consumer protection is at the heart of everything that we do. My own journey into this space started when a constituent said to me, “Who do I contact in Parliament? I have been following a scam online linked with cryptocurrency.” When I looked into what was happening at that point, there was no all-party parliamentary group on the subject and I was not sure where to direct my constituent, so, leading on from constituents’ concerns, we set one up. It is vital, given what has happened this year, that regulation and a framework are taken forward at pace.

The UK already has a rich legacy and strong track record as a leader in financial services and fintech, so there is huge potential here for economic growth, jobs and skills from the sector. As the mum of a 14-year-old who is choosing her subjects at school, I have been looking at reports on jobs for the future. She thought that, given our family’s history in medicine and pharmacy and so on, I would encourage her to become a doctor, but I said, “Coding is the way ahead for you.” She was shocked by that. Young people are already doing a lot of this in school—it comes very naturally to younger generations.

I have researched the subject and think that the jobs of the future will be placed firmly in science, technology, engineering and maths activity, and in the finance sector, too. In future, digital, health and tech will be across all sectors, and I am enthused by that. It would be good if the Minister and Cabinet colleagues identified the centres of excellence at college and university levels so that young people know where to go, and where the gaps are. That would ensure that we level up opportunities right across the United Kingdom for people who want to have a future in development and innovation in the sector.

We already have some fantastic examples of innovative companies in the UK, not just in London but in Scotland and elsewhere, creating jobs and development opportunities. In terms of international practice, I had the privilege to speak with Alex Bornyakov, Ukraine’s Deputy Minister of Digital Transformation, who told me that cryptocurrency had been essential to Ukraine’s ability to respond to the Russian invasion. It is right that we place consumer protection, regulation and robust regulatory frameworks at the heart of everything that we do, but we should also look to the sector’s potential to solve some of the issues that countries will face and some of the difficulties across the world just now.

It has been almost a year since the Government set out their landmark vision to make the UK a global hub for crypto investment. The Minister will be aware that I have been very supportive of the Government’s vision, and I am keen to work constructively with him to ensure that it becomes a reality. The Government’s announcement is welcome for business, because good actors want regulation. I was not sure about that when I started looking into the sector with the all-party parliamentary group. From media and things I had read, I thought it was very much a wild west, where people did not want structure or regulatory frameworks; but there are many good actors who do want those things, and investors need regulatory frameworks to take forward their work in the sector with confidence. Business certainty supports a fair and transparent market. There must never be a race to the bottom in the UK, and I urge the Government to take forward the regulatory framework at pace, because we need to protect consumers first and foremost in all that we do. Regulatory clarity and business certainty are at the core of that work.

Over the past year members of the all-party parliamentary group have very much been educating ourselves, and I include myself in that. One has to do a lot of reading about the sector to understand acronyms and so on. We spent a lot of time even understanding that, when people spoke about fiat, they were speaking not about a type of car but about money. We have upskilled ourselves, which is a great first step. When I spoke with Members of the Swiss Parliament, they said that they had been on a similar journey; upskilling across their chambers meant that they could engage much more effectively on “what works” legislation.

Over the past year, industry has raised with me a number of barriers, which I will set out to help the Minister and support the work he is taking forward. First, significant delays are still being reported by business operators seeking registration with the Financial Conduct Authority. Will the Minister update us on progress in that area, and on the number of firms that have been granted licences in the UK since the creation of the licensing regime for crypto firms?

We have also heard real frustration about lack of communication. Some companies are not certain about what is required of them; they are being left for months on end with no response to tell them whether anything further is needed, whether their application is in process, or whether they need to take additional steps. I have met with the FCA on a few occasions and learned of their CryptoSprint event last year, which brought together industry and regulators to look at a number of areas, including how to protect consumers and markets while supporting innovation. I felt that that was a real step in the right direction, but could more be done to take this work forward?

Will the Minister update the House on the average FCA processing times for crypto registrations? I fully understand if he is unable to do so today, but it would be helpful if he wrote to me with that information. The FCA reassured me that it was employing more people to work in its department dealing with this specific sector, given the public interest in and engagement with cryptocurrency. It needs that expertise and wants to move forward at a greater pace.

It would also be helpful to know what more the FCA has planned to foster sustained and meaningful engagement with the sector. I have spoken to businesses that have such a bond with the UK—businesses that have been here and that want to set up here, and whose representatives have been to university here and feel that the UK is the place to be. Regrettably, because of the delays and lack of engagement, some have gone to Paris, while others have gone to Zug in Switzerland and elsewhere. That is a great shame if they are good actors and want to support the United Kingdom economy.

The all-party parliamentary group is undertaking an inquiry. We have heard about opportunities for the sector from businesses and regulators, and from those in overseas territories. I have noticed the importance of engagement between Government, regulators and the sector to ensure that the policy developed is practical and fit for purpose. Members of Parliament in Switzerland told us about the value of thinking about the different pillars of the sector—not just finance but research, university development and innovation hubs—and about bringing them all together with companies, regulators and Government to ensure that there are opportunities and a robust framework.

When we talk about the future of cryptocurrency regulation and what it might look like, it is imperative that everybody works together in the same direction to get it right. That has to be the case for consumer protection, which is the reason I became interested in this area in the first place and is at the core of everything that we are trying to do. At times, there has appeared to be a disconnect between the Government’s vision and some of the statements made by the banking industry and so on. How is the Minister pulling that together so that everyone is moving ahead in tandem? Yes, concerns are being raised and addressed as we go, but we need to ensure that people are moving in the same direction, rather than pulling in different directions away from the vision of the UK cryptocurrency hub set out so meaningfully by the Prime Minister.

We need a proportionate approach to regulation that balances risk and ensures high levels of consumer protection, but does not unnecessarily restrict growth or innovation for our future. That should be built on a strong evidence base to ensure that sound decisions are made. I recently heard from a number of economic crime experts at Elliptic, Chainalysis and the Royal United Services Institute; they indicated to our inquiry that crypto-related crime still accounts for quite a small percentage of overall crypto transactions, and that economic crime remains a challenge for financial services as a whole. Cryptocurrency is a part of that, but the focus is not just on that sector.

I have written to the FCA and the Bank of England to get further information. In recent statements, the incoming chair of the FCA has said that crypto platforms are “deliberately evasive”, facilitate money laundering on a large scale and create “massively untoward risk”. The Governor of the Bank of England said that cryptocurrencies are the new frontline in criminal scams and have created an

“opportunity for the downright criminal”.

Of course, these issues must be addressed, but that has to be balanced with the evidence to ensure proportionality. That is why it is even more important that Government regulators and industry come together to move things forward in a way that is meaningful and that everyone can agree on.

Another potential barrier is the recent announcements by leading banks to limit or block cryptocurrency transactions. I have written to them to tease out a little more information. Nationwide, Starling Bank, Santander and Virgin Money are among a number of banks that have announced limits and restrictions on transactions. Starling Bank has claimed that crypto exchanges are

“high risk, and heavily used for criminal purposes”,

which is a real concern. Other banks, such as Revolut and Monzo, are said to be open to crypto and largely positive towards cryptocurrency transactions. Again, the divergence of views within the sector should be grounded in evidence and be addressed in a way that protects consumers and puts them at the heart of what we do.

On the timeline for the Government’s plans, I have been speaking with many members of other Parliaments and businesses that operate internationally, because this is an international issue and hopefully there will be guidance internationally that we can come together on. If we want to harness the UK’s position at the forefront of this industry, we need to move at pace while ensuring that the work we do is robust.

I reassure the Minister that the all-party parliamentary group will continue to advocate for the UK cryptocurrency hub set out in the vision, and work in conjunction with his office. We will be extremely pleased if he updates the House on timescales for the year ahead and how he sees this playing out, so that we can continue to work constructively to support everything he is doing to protect consumers, while harnessing the innovation of cryptocurrency for the future in the United Kingdom.

Oral Answers to Questions

Lisa Cameron Excerpts

Tuesday 20th December 2022 Commons Chamber

[John Glen]

My hon. Friend is somewhat of an expert in the subject. I agree that it is critical that we get it right. Decisions on the distribution of high-needs funding are a matter for the Department for Education, but I reassure him that, as a result of the additional funding announced at the autumn statement, Suffolk’s high-needs funding is increasing by 11% per pupil in 2023-24 compared with this year. The Under-Secretary of State for Education, my hon. Friend the Member for East Surrey (Claire Coutinho), who has responsibility for children, families and wellbeing, will be happy to meet my hon. Friend to describe and discuss the different mechanisms of allocation and, indeed, how the high-needs formula works across different local authorities.

[Dr Lisa Cameron (East Kilbride, Strathaven and Lesmahagow) (SNP)]

A merry Christmas to everybody when it comes. What steps is the Minister taking to review further education funding for people with disabilities? It is very important that people have equal opportunities across the United Kingdom and that our education system has inclusion at its core.

[John Glen]

I completely agree with the hon. Lady, and I am working with colleagues in different Departments looking at the challenges to help people back into the workplace. It is particularly difficult when people need support for such a range of needs and conditions. We must treat everyone as an individual and be ever more creative in the solutions that we bring forward. I look forward to working with her and colleagues in Government to try to assist in improving the situation.

Energy (oil and gas) profits levy

Lisa Cameron Excerpts

Tuesday 22nd November 2022 Commons Chamber

[Mark Fletcher (Bolsover) (Con)]

“There is nothing in the autumn statement that shows compassion” was one of the last sentences from the hon. Member for Jarrow (Kate Osborne). With the triple lock protected, benefits up by 10.1%, the household energy cap extended, a £900 support package for households on means-tested benefits, £300 support payments to pensioners, £150 to individuals on disability benefits, energy bill support extended into next year, a below-inflation 7% cap on social rents that will save the average renter £200, the education budget protected at £2.3 billion—she did mention children—and an increase in NHS spending of £3.3 billion, is there anything but compassion running through this autumn statement?

I am happy to go so far on economic policy. There is a fair cop that we have made some mistakes on economic policy—that is a perfectly fair cop. But we cannot go into a different galaxy of common sense, where there is no economic credibility, and pretend that that is the reality. I have to question those on the Opposition Benches: if their solution to the economic crisis we face hinges on non-dom status and private schools and does not mention private enterprises, growth and global factors, we are in a different galaxy.

I will go back to where I was planning to start my speech by saying that I had the great pleasure of being parliamentary private secretary to the Chancellor—or more accurately Chancellors—in the build-up to the statement. I must say that my right hon. Friend the Chancellor is a fantastic Member of Parliament and last week delivered an incredibly difficult statement both eloquently and with an underlying level of compassion that we should be very proud of.

The Chancellor set out quite firmly the circumstances we face as a country. All these factors—the pandemic we have gone through, in which we spent £400 billion trying to keep the economy on track, the supply chain issues that came from that global pandemic, the damage that has done to the businesses up and down the country and the costs they face, the increases and challenges to shipping or the 630,000 people who have dropped out of the workforce since the pandemic—are inflationary and have created huge pressures. The OBR report, which I am sure the Labour party has read with great interest, clearly identifies global headwinds as the primary cause of the situation we are in. Does anybody from Labour want to challenge that? No—we are moving on.

The second thing we must look at is Vladimir Putin’s war. My right hon. Friend the Member for North Somerset (Dr Fox) made some interesting points about patriotism and how we address these economic circumstances. We have spent £2.3 billion as a country on the situation in Ukraine, but there has been something along the lines of £150 billion of additional spending on energy within our economy over the past year. That is a huge increase; as the Chancellor would quickly point out, it is another NHS, and £55 billion of that is coming from Government coffers—again, I would suggest compassionately—to households and businesses up and down this country.

We face a challenge of inflation, of war on our doorstep and of global markets losing confidence. That has a ripple-down effect and, unfortunately, the circumstances we find ourselves in mean that the Chancellor had to make some difficult decisions. I think he did so in a way that tries not only to help individuals and families with the cost of living but to provide confidence that Britain can pay its way in the world. When Opposition Members bandy around somewhat childish policies, whether on non-dom status or private schools—it doesn’t half feel as if we are back in the 2015 election with those two; I cannot wait to see the new version of the “Ed stone”—it seems to me as if we are on a different planet.

I wanted to add some notes of caution, however, because I was not entirely happy with everything in the statement. First, there are the labour shortages we face. We increased working-age benefits—I believe there is a compassionate argument for that—and the minimum wage, but our small businesses are struggling to recruit and retain staff, and I worry about the impact that that will have on the labour market. It will have to be monitored very closely.

Secondly, more money for the NHS is of course welcome, but only if we see a proportionate increase when it comes to outputs. We have left the NHS in a difficult situation: covid restrictions are still in place in a lot of venues, and we need to remove them as quickly as possible. Hospitals have been operating at around 80% to 85% of capacity en masse. We cannot get back to previous levels and clear the backlog, which requires us to go above 100%, if we are operating at an 85% building capacity.

However, I very much welcome the Chancellor’s comments on having a workforce plan, which will help to create a longer-term, sensible solution for the NHS, particularly in dentistry and mental health, in which our workforce numbers are woefully low.

[Dr Lisa Cameron (East Kilbride, Strathaven and Lesmahagow) (SNP)]

Will the hon. Gentleman give way?

[Mark Fletcher]

I am in full flow, but I am happy to give way.

[Dr Cameron]

I thank the hon. Gentleman for giving way and, in particular, for raising mental health. I have been looking just today at the startling figures stating that 215 young people took their lives in 2021—the highest figure since records began. The workforce needs nurses and doctors, but also psychologists and mental health professionals going forward—I refer the House to my entry in the Register of Members’ Financial Interests on that point. It is crucial that we address those issues to support young people and their potential.

[Mark Fletcher]

I completely agree. We have to be aware of the situation that the pandemic created in mental health. We talk about and acknowledge mental health a lot more, which is a positive thing for society, but our health workforce is well behind where we are as a society on conversational issues. We also have to address pressures relating to image and social media, which affect young people in particular, and the fact that, although we are all so much more connected through mobile devices, we are so much more isolated and judge ourselves in those circumstances. I thank the hon. Lady for raising that point.

--- Later in debate ---

[Aaron Bell (Newcastle-under-Lyme) (Con)]

Thank you very much, Mr Deputy Speaker. It is a pleasure to follow the hon. Member for Bradford East (Imran Hussain), although I utterly reject his thesis and characterisation of the response of those on the Government Benches; that is not appropriate in respect of this statement or the previous one. These are undoubtedly difficult times and they require tough decisions. That is what we saw from the Chancellor last week. The priority is to restore economic stability and sound money and, most of all, to tackle inflation.

I thank my hon. Friend the Member for Hitchin and Harpenden (Bim Afolami) for talking about inflation, as did my right hon. Friend the Member for North West Hampshire (Kit Malthouse). As my hon. Friend said, the inflation that we are experiencing, which is happening everywhere, is the most pernicious thing that we have to tackle right now. We have not had inflation at this level since I was in short trousers. The priority with inflation is to get on top of it quickly. If we allow it to persist, it will make everyone poorer again and again—it erodes people’s savings and the value of people’s salaries, which affects the cost of living—so we must tackle it. The measures that the Chancellor set out last week do that.

At the same time as tackling inflation, the Government are protecting people from inflation through the energy price guarantee—it is very expensive, which is another reason why we will need to make savings elsewhere—and maintaining the triple lock. A number of my constituents wrote to me about that—I have a considerably above-average number of pensioners in Newcastle-under-Lyme and had a lot of correspondence about it. I assured them that I would go to the Chancellor and fight for them. I am pleased that he listened to me and like-minded colleagues and that we will put up the state pension by inflation. We will also put up pension credit by inflation in the new year and all benefits, including in-work benefits.

I agree with my right hon. Friend the Member for Epsom and Ewell (Chris Grayling) that we need to restore more conditionality. In a world where we have quite close to full employment at the moment—I accept that, as the OBR said, there may be some increase in unemployment—we need to encourage those who can take on more hours or go back into the labour market to do so. We are also being fair in protecting people from inflation through our biggest ever increase in the national living wage, which is now up to £10.42 an hour for those over 23—a boost of over £1,600 to annual earnings.

It is not just about stability; it is also about credibility and being honest with people, as the Exchequer Secretary said when opening the debate. It is about being honest and credible not only with the markets, but with the country. If we are to be honest and credible in this Chamber, we should acknowledge that mistakes were made in the mini-Budget. I thought the decision on the 45p tax rate was a mistake, and I communicated that privately to the Chancellor. That decision was reversed and now, contrary to what we have heard from some, we are asking those with the broadest shoulders to bear the burden of taxation and lowered the 45p rate threshold to £125,000. Overall, this statement is a mixture of spending restraint and tax rises, but we are making sure that the burden falls on those who are most able to afford it—completely contrary to what Opposition Members have said today.

The Opposition do not seem to have a plan of their own. We kept being promised one today by the shadow Minister, the hon. Member for Hampstead and Kilburn (Tulip Siddiq), but there never seemed to be one. The shadow Chancellor herself did not offer anything in her rather over-the-top response to the Chancellor’s statement last week. Again and again, people have brought up the last 12 years, but I repeat the point I made in an intervention: we inherited a £149 billion deficit and we worked hard to reduce it, repeatedly opposed by the Opposition. The national debt has increased because borrowing each year does that.

The Opposition like to blame global financial circumstances for situation—they like to say it was made in America—but the truth is that, as the International Monetary Fund said, by 2007 we were running the biggest structural deficit of any country in the G7. The idea that we should put the Labour party back in charge of another difficult situation is for the birds.

We are genuinely dealing with a situation largely caused by unprecedented external economic shocks. The biggest of those shocks was covid—a once-in-100-years event. That cost £400 billion—money we ultimately have to pay back, and as interest rates on Government debt rise, repaying those debts becomes more burdensome. I believe that £400 billion was money well spent: it saved jobs, it saved businesses and it saved lives. We should all be proud of what we did through covid, but we have to face the fact that there will be a reckoning.

The same is true of the energy shock. We have the first war in Europe for 75 years, and a once-in-50-years energy shock has followed. I think we can be proud of our response, both abroad in our support for the Ukrainians, in materiel and training for their armed forces and diplomatic support for Volodymyr Zelensky, and at home in shielding people, households and businesses from that shock, but it is expensive. As my hon. Friend the Member for Bolsover (Mark Fletcher) said, that costs an extra £150 billion; the Government are bearing a third of the cost, but it is a cost for everybody to bear, equivalent to an extra NHS. We need to find ways to pay for that.

Speaking of the NHS, the Chancellor—as befits a former Health Secretary and a former Chair of the Health and Social Care Committee—has protected our NHS in these difficult times, giving an extra £7.7 billion over the next two years to tackle precisely the issues we have heard about today, which I recognise in my own constituency. It is difficult for ambulances to get into hospitals because hospitals are operating beyond capacity, and it is difficult to get people out of hospital and into social care.

The ABCD plan proposed in the summer is the right approach; we need to tackle the backlog and get people seeing their GPs again. Putting extra money into the health service, even in these difficult economic times, is the right thing to do, as is the £4 billion we are putting into schools. We are protecting the budgets that matter the most to our constituents in places such as Newcastle, and no doubt Bradford East as well. The money will put real-terms per pupil funding back up to above 2010 levels—more than the Labour party has pledged to give schools.

We are also protecting the commitments we made during the general election to level up. Newcastle-under-Lyme has secured £34 million through the future high streets fund and the towns fund. Speaking of high streets, which are critical in constituencies such as mine, the business rates package we have offered—£14 billion over the next five years—and the long overdue revaluation, which will make a huge difference to business rates in the centre of Newcastle-under-Lyme, are extremely welcome, as is the new relief for retail, hospitality and leisure being extended 50% next year and 75% the year after. That will make a real difference to the viability of existing shops in my town centre and the viability of the new shops that people open.

[Dr Cameron]

I thank the hon. Gentleman for setting out clearly a number of the financial issues that have been impacting the cost of living and need to be addressed. Does he agree that, in addition, we need to look at decentralised finance? With the collapse of FTX, and the fact that almost 10% of the UK population have some kind of engagement with the cryptocurrency markets, we need to ensure that consumer protection is at the forefront of what we are doing, have a deeper look at regulation and move that forward at speed.

[Aaron Bell]

I thank the hon. Lady for raising cryptocurrency, FTX and so on. She may know that I recently held a Westminster Hall debate on the pernicious reach of cryptocurrency into sport, and that one of her SNP colleagues held a separate debate on it. The Treasury needs to listen carefully to the issues being raised around cryptocurrency, and particularly the damage it is doing to young men, who are very susceptible to “get rich quick” schemes.

I am pleased that the Government resisted the temptation to cut long-term capital budgets, such as Sizewell C, the levelling-up fund and our investment in R&D, which is where we will get growth from in the future.

To conclude, these are difficult times, but I think we are taking action that is appropriate and fair. We are making sure that those with the broadest shoulders who can bear the burden do so. We are splitting the cost of covid and the energy price shock between tax rises and spending restraint. The OBR itself expects our package to reduce peak inflation and peak unemployment, and the Bank of England now expects lower inflation and lower peak interest rates, which will look after mortgage holders. All the while, we are looking after the NHS and our schools, as our constituents expect us to do. I have every confidence in the Chancellor and his statement, and in our ability to steer the economy through these troubled times.

Economic Update

Lisa Cameron Excerpts

Monday 17th October 2022 Commons Chamber

[Jeremy Hunt]

I absolutely am very happy to confirm that I agree with that in principle.

[Dr Lisa Cameron (East Kilbride, Strathaven and Lesmahagow) (SNP)]

Two very important conferences are taking place in the UK this week that support the Government’s aim for a UK cryptocurrency hub: the digital assets summit and the bitcoin collective summit. The crypto and digital assets all-party parliamentary group, which I chair, is keen to meet the Treasury to hear about the Chancellor’s commitments to regulation and consumer protection and to take forward the area’s vast potential in job creation, innovation and growth.

[Jeremy Hunt]

I know that the hon. Lady has been in discussions with the Financial Secretary to the Treasury, and I know that he would be delighted to communicate with her further, because she obviously has a lot of expertise in this area.

Cryptoassets: Regulation

Lisa Cameron Excerpts

Wednesday 7th September 2022 Westminster Hall

[Martin Docherty-Hughes (West Dunbartonshire) (SNP)]

I beg to move,

That this House has considered the Government’s regulatory approach to crypto-assets and currencies.

It is good to see you at least in the Chair, Ms Rees, and it is good finally to be here to talk about a subject that has produced an awful lot of heat and often little light in this place—that of the regulations on cryptocurrencies. I hope you will forgive me if I go on at some length about the issues that I think we have to debate in Parliament today.

We should start with a few pieces of accountability as, of course, we are not quite in the post-trust era. I am the chair of the all-party parliamentary group on blockchain, as well as being a vice-chair of the crypto and digital assets all-party parliamentary group. I see the chair of that all-party group, my hon. Friend the Member for East Kilbride, Strathaven and Lesmahagow (Dr Cameron), in their place today. The latter group is a relatively new kid on the block as it was established just last year, whereas the all-party parliamentary group on blockchain has been around for some time.

Let me come to the first of many aspects of what we can see as a sort of cognitive dissonance around the idea of crypto. Despite the fact that we often talk about crypto as a new kid on the block, it is now a pretty widely accepted concept, even if a poorly understood one, and I am glad to see that we have interest in today’s debate from across the Chamber—at least, I think we have interest from across the Chamber. I hope we will hear a lot of interesting ideas about what the future holds, and I will add a couple of suggestions of my own towards the end of my speech. Given that this is the first debate in the House on the subject, we require something of a tour d’horizon of the landscape as it lies today before we move on to the challenges and some opportunities that recent developments provide for the future of crypto.

Before doing so, however, let me place on the record my gratitude to the secretariat of the all-party parliamentary group on blockchain, led by Professor Birgitte Andersen of the Big Innovation Centre. Her leadership in creating space within the all-party parliamentary group to allow many of the big issues of the day to be debated over the past few years has been vital, and the work put in by her researcher, George Farrer—and indeed by his predecessor, Fernando Santiago—to ensure that the topics remain current and relevant has been much appreciated.

Through the forum that the all-party parliamentary group provides, I was able to meet Dr Robert Herian, now of the University of Essex, and I am much indebted to the work he has done, particularly in his 2018 book “Regulating Blockchain”, which will provide the basis of some of the suggestions I make today. If Members are interested in the subject, they should buy a copy of the book. I am sure Dr Herian will be glad of the plug.

For a movement that is often described as a cult, it is apt that crypto even has its own origin story: it was invented on 31 October 2008 with the release of Satoshi Nakamoto’s “Bitcoin Manifesto”. However, as with much of the myth and legend around the subject, it is unclear whether Nakamoto is a single person, or indeed whether much of the work was singly their own, given that theoretical work had been done on different concepts of blockchains, going back to the early 1980s.

What Nakamoto’s manifesto did, however, was bring the technology to wider prominence. There was a ready pool of adherents in the immediate aftermath of the 2008 financial crisis, who understood the importance of decentralised finance and the potential to move beyond financial institutions as they have been conceived hitherto. Progress was slow but steady at first, but it picked up in the middle of the last decade with the release of books such as Alex and Don Tapscott’s “Blockchain Revolution” in 2016, which was my gateway into the possibilities of the technology. That was followed by exponential growth over the past few years, with the rocketing in value of not only Bitcoin but other cryptocurrencies such as Ethereum and the range of memecoins, which made up so many of the initial coin offerings that we saw around 2018-19.

All the way through, many have predicted a crash, but the pandemic lockdown saw crypto reach unforeseen heights, whether it was furlough cheques or the lack of faith in existing investment that drove the trend. The high watermark seems to have been in November 2021, when the value of one Bitcoin reached about $68,000. The ultimate symbol of the bubble may well have been the adverts during the American Super Bowl half-time break, with Hollywood A-listers such as Matt Damon and Larry David imploring us to buy crypto.

The Super Bowl ads were not just good at showing us what the bubble looked like; they probably go down as one of the supreme examples of what crypto’s contribution to our discourse has been: its unique culture. One had comedian Larry David decrying seminal innovations throughout history—the wheel, the toilet, the light bulb—before doing the same with crypto. “Don’t be like Larry,” the ad exhorted the watching millions, “Don’t miss out on the next big thing.”

FOMO, or fear or missing out—there are plenty of folk in this place who have that—has certainly motivated many to get into crypto, but so have a range of other acronyms that appear on the profusion of online crypto culture forums. I hate acronyms, as many of my colleagues know, but the one that struck me the most is HFSP—have fun staying poor. It is a motto that manages to encapsulate so much: the unscrupulous nature of so much of this mainly unregulated space; the background of so many crypto investors, cut off from access to the traditional markets; and the pervading millennial jokey humour.

I come to the first very important point at which more Government attention needs to be paid to crypto. The market has been allowed to proliferate, drawing in uninitiated small-scale investors, who begin crypto trading because they see only the upside: the market that lies beyond outright scams such as Squid coin or OneCoin, in which investments of dubious provenance have been hyped and pumped, attracting the hard-earned savings of so many people.

I represent one of the poorest constituencies in the country, West Dunbartonshire. I grew up in that community in the ’70s and ’80s and lived through what I believe was its ruination by Thatcherism. It is still a resilient community, but too many feel marginalised and remote even from our neighbour, the city of Glasgow. Many of my constituents are the type of people who have been caught up in the dubious practices around crypto, and I wish more could be done about it, especially as we head into the cost of living crisis. We need to remember that it is often those who feel they have nothing to lose who are the targets of scams.

[Dr Lisa Cameron (East Kilbride, Strathaven and Lesmahagow) (SNP)]

I thank my hon. Friend for bringing this extremely important debate to Westminster Hall. Given all that he is saying, does he agree that consumer protection needs to be at the heart of a regulatory framework? We should highlight some of the good examples of innovative businesses, including in Scotland, such as Zumo in north Edinburgh and Scotcoin in north Glasgow, which are creating jobs in the industry.

[Martin Docherty-Hughes]

I do not disagree, but I will talk later about the reality of the existing regulation and how we should lead best practice.

It is important that regulation is able to make a clear delineation of where the legitimate business exists and outright scam cannot. Despite the halving of the value of Bitcoin since its peak in November, it remains at a price much higher than it held a few years ago. Although many will argue over the inherent value of crypto, the market remains remarkably buoyant, despite all that has happened.

Many of the challenges begin with the merest definitions involved in the whole business. As I said, I hate acronyms. All the DLTs, NFTs and CBDCs are confusing enough before we even get to the question of what crypto actually is. Is it an asset? Is it a technology? Is it an idea?

Another enduring problem of crypto, encapsulated in that Larry David advert, is its novelty: the idea that we have a genuinely world-changing thing before us. That idea falls apart immediately as it comes into contact with the real world. As an asset class, it has proven to be resilient neither to inflation nor to external shocks, never mind the fact that conventional and centrally regulated currencies have continued to attract a far larger interest as a holder of value in straitened economic times.

It has been difficult to keep up with the pretence of some of the more outlandish claims about the technology’s potential, as they struggle with the evidence of the past few years. International bank transfers, for example, are still cheaper, when taking into account the need to convert crypto into fiat currency. There remains a massive legitimacy problem given that the post-truth aspects of blockchain technology struggle when put beside existing institutions.

Even the idea of a decentralised and therefore more equitable structure has struggled against the demonstrable fact that so many cryptoassets remain in the hands of so-called whales—the few at the top who managed to get their timing right or to be there when the currency started. Far from being a novelty, the lived experience of the crypto bubble has reinforced the fact that there truly is nothing new under the sun. While so much of it remains a new arrangement of an old song, we hear riffs that echo debates that are being had outwith the crypto bubble; debates that have resonance in the fields of economics, sociology or computer science.

Solutionism is the idea that there is a clever, technological answer for all of life’s problems and that, somehow, human nature can be overridden with the application of the requisite solution. Crypto fits squarely in that space. One wag called it a solution in need of a problem, and a whole range of problems have been hastily set up to be solved by it. As we will see, that gets entirely in the way of the more durable and sustainable uses that it has.

Principal among those is the way in which many adherents seem to revel in the way that crypto offers the opportunity to turn the current logic of most of the internet on its head. The current logic is that we are offered free services in exchange for access to our metadata. Instead, this bold new vision goes, we should—or could—monetise these fractional shares of data, which we give back to, say, Facebook or Google. The value of popular tweets that we make could be released, as could that of those Instagram posts that have been gathering likes but no dollars. There is obviously not the same value to be released for everyone, especially a boring auld guy like me. [Interruption.] I am grateful for the support of my hon. Friends. There is a lot of doubt about how much that value would ever amount to, but the principal argument against this sort of future for crypto is that it adumbrates a dypstopia where every single aspect of our lives that could be monetised can be and where our maximum productivity can be released.

For many, including some in the House of Commons, that is the final step on the way to a new liberal utopia, where we know the price of everything, although the cynic in me thinks that we will miss out on the value of quite a lot. Given the way social media has descended into something of a mess, catering to what seems like a mixture of our lowest common denominator and our basest desires, I am not sure that giving human beings the ability to monetise absolutely everything creates a positive incentive.

This idea makes the assumption not only that the technology is the most efficient way to solve these problems, but that it is the most efficient version of itself. In speaking to those who have worked on the technical side of the crypto industry, it is remarkable how imperfect the technology itself is, mainly because it has humans involved in its creation. To take one example, coders make errors in one out of every 10 expressions, or every three lines of codes—code that is, of course, written in a way that reflects the biases of the person writing it.

In cryptocurrencies that seek to use the technology to incorporate smart contracts, and therefore programming languages, that opens up a whole range of exploits, with systems not working as they should and money being vulnerable to theft. According to one estimate, 5% of all decentralised finance—or DeFi—funds are lost in that way, which is especially problematic when most of those funds are uninsured.

The technical issues are dwarfed by the environmental impact of crypto, which is a truly vast problem that threatens to undo all the good that it could bring. Essentially, the technology inherent in most forms of crypto—nodes competing to solve puzzles to access coins—creates the incentive to use increasingly large, expensive and energy-intensive servers. Not only does that consume vast amounts of electricity—the equivalent of the annual energy use of Argentina, accordingly to legend—but it creates another brick in the wall of a crypto oligarchy, with the largest investors able to control far more of the servers and thus far more of whatever cryptocurrency is held there.

There are certainly workarounds, and I hope to explore some of that in my speech, but as we stand here today, looking at the landscape, it is not only another challenge that cryptocurrency advocates need to overcome but, added together with the other questions I have laid out, it becomes something more significant that needs to be addressed if they want crypto to become part of their daily lives.

Before I am accused of being too much of a negative Nancy, it is important to understand exactly where we are at the moment, because only by doing that can we better understand the potential for blockchain technology. Then we can focus better on the regulation that we need to bring in to ensure that it thrives. My biggest fear is that bringing in regulation means changing so much of the culture in the industry, and dialling down so many of the solutionist expectations of its adherents, that it may not be possible, but I am going to give it a shot.

It will be difficult to push back so much of interest that has been created in the crypto community and it is important to understand what is motivating these investors, many of whom are young or from non-traditional finance backgrounds, especially as we stare down the barrel of a cost of living crisis and the inevitable recession that will follow. Blockchain’s genesis, following the 2008 financial crisis, is central to this.

The possibilities for demystifying finance, and for allowing normal investors access to resources usually only available to those able to access corporate lawyers, is certainly within reach, if the capabilities of so-called distributed autonomous organisations—or DAOs—are realised, not only as an add-on for existing companies, businesses and commercial practices, but as a way of creating a new type of entity that can avoid the pitfalls of oligopolistic capitalism.

Blockchain’s birth as something of a libertarian project has obscured the incredible potential for the technology to improve government efficiency, clamp down on tax avoidance and increase accountability for those in public life. The best existing example of that can be found in the Republic of Estonia; I should probably add that I am chair of the all-party parliamentary group on Estonia. Estonia began a roll-out of blockchain in its governmental processes from the Ministry of Finance, and in doing so made all other Ministries reliant on the technology themselves and ensured that one of the central pillars of the social contract—the relationship between the taxpayer and the Government—was radically accountable.

As things stand, the necessarily slow pace of regulation means there is every incentive for individuals to stay a couple of steps ahead of regulation, exploiting loopholes and bending the rules as much as possible. They are of course supported by an industry of enablers and administrators who find ways for their clients to keep to the letter of the law while evading the spirit of it, although often not even succeeding at that. That means that Her Majesty’s Revenue and Customs is always playing catch-up, with any deterrence factor it represents always being ex post facto.

The radical solution offered by crypto is turning that calculation on its head, as Dr Robert Herian outlines in his book, “Regulating Blockchain”:

“Blockchain may offer an opportunity to recalibrate the power play between those who would engage in aggressive tax strategies and planning, and those charged with regulating or containing them by, for example, more effectively enforcing tax liabilities ahead of settlement on trust, rather than relying on bringing trustees to account post settlement.”

This is the essence of blockchain for good—an idea that the all-party group, of which I am chair, very much tries to promote: both individuals and the Governments they elect should be given the ability to hold third parties accountable in liberal democracies, and hopefully beyond.

In ensuring that crypto plays the role that it could, regtech—regulatory technology—will come increasingly to the fore over the coming decades. Given its traditionally attributed birthdate of 2008, we should note that crypto is now entering its third decade of existence, and I like to think that that could herald a new-found maturity. If there is something that we need to take from the recent crash, it is that the wild west days of crypto are over. Too many people have been affected, and too much is now at stake. The Government now have the opportunity to rein in the crypto bros and ensure they make good on their promises to investors, creating the environment for an industry ready to realise its potential.

In that spirit, I hope to make a few suggestions of my own about I think the Government should proceed. In the spirit of there being nothing new under the sun, which I touched on earlier, it is important to start with the Government and stakeholders understanding how much law is already in place to curb the worst excesses of a supposedly unregulated market. To quote Dr Robert Herian again:

“sandbox culture as the sine qua non of contemporary regulatory standoffishness at the state level has ultimately spawned the problematic regulatory conundrum with which we are now faced, one in which innovations and solutions have been legitimised.”

Quite simply, in pretending that they have no levers at their disposal, the spies and speculators who have proliferated all the way through our economic history have re-emerged in the guise of the crypto bros. The biggest step that the Government could take to redress the balance is to enforce the law that they already have.

Fraud is fraud—there are no two ways about it. The police are overwhelmed dealing with novel scams, but scams are what they are. Better training for those dealing with enforcement, and ensuring that they are able to work with those in industry who are ahead on best practice, is crucial. All of that cascades from an empowered and properly funded Financial Conduct Authority, which is not deliberately, as many have speculated, underfunded and under-resourced as a way of ensuring that many offenders slip through the gaps.

This situation has created many of the trust issues that crypto seeks to address: smaller-scale investors get stung by unscrupulous practices that larger entities can use an army of lawyers to protect themselves from. Although we could get into a long philosophical discussion about trust and the possibilities for post-trust, it is important to note that this aspect of crypto has not proven as transformational as many of its adherents promised.

The idea that Bitcoin and other cryptocurrencies would prove to be immune from inflation, speculation and the like has proven to be demonstrably untrue, as has the idea that a new form of stablecoin could come in as a forum of neutral exchange between the various types of crypto. The problems experienced, for example, by the Tether stablecoin demonstrate this. A simple solution whereby every dollar of the stablecoin is backed by a dollar of assets fell apart under the lack of accountability for the company’s owners, and the markets reacted in the way that markets usually do when promises are not met. In this place, vital to the functioning of any sort of crypto culture, the deliberate lack of trust—the post-trust aspect of the crypto stablecoin—came off worse after coming into contact with the entirely rational human instinct to need the sort of trust that has hitherto been provided only by institutions and, in this context, central banks.

My second proposal for regulation is therefore that the Government not only bring forward the regulation expected in the Financial Services and Markets Bill, but do their utmost to ensure that debates around that exceptionally important crypto development are able to be had in the House—and not only when the Bill is in Committee. The Bank of England published feedback on central bank digital currency proposals in June last year. It stated five core principles, the first of which is the most important:

“Financial inclusion should be a prominent consideration in the design of any CBDC.”

Paying heed to that core principle means the scales being tipped back away from the crypto whales, who are increasingly hoarding the new assets, in favour of the average investor, realising the potential that gave so many, previously excluded from the system, some hope that they could be part of it.

Similarly, the opportunities for Government to enable financial inclusion through the development of proposals for decentralised autonomous organisations are vital to ensuring that the benefits of access to stable digital fiat currencies can be extended to the broader commercial sector. I hope that company and contract law can keep pace with such developments in an inclusionary way. At the heart of that is, obviously, the Financial Services and Markets Bill. I hope the Minister will allow time in his remarks to elaborate on those aspects that may not come to the fore in the limited time that will be allocated to the new occupant of No. 11.

I have presented two solid, legalistic opportunities for the Government to regulate crypto, but I should also like briefly to touch on the opportunities that exist for the environmental impacts of crypto to be negated, with the creation of carbon-neutral data centres. It will come as no surprise to anyone who has paid attention to the renewable energy sector that the nation of Scotland is ultimately blessed with resources that should see us well placed to make the transition not only to a carbon-neutral future but—and forgive me for saying it—an independent, sovereign one.

However, thanks to the work of fellow SNP member Stuart Evers, we can see that Scotland also has the opportunity to become a hub for carbon-neutral data centres, which make use of three qualities that Scotland has in abundance: not only the technical expertise to provide new network security in large data centres, but the physical security offered by our natural landscape and the energy security provided by ready access to what are called dual renewable resources, whereby a primary green energy source is always backed by another green source should it fail. That is best accomplished by a combination of wind and tidal energy. Thanks to Stuart’s preliminary work, we can see that Scotland hosts a plethora of potential locations for such centres, primarily along our west coast and in the Orcadian archipelago. That is certainly not crypto-specific, but it is an important point to make when we think about the ways in which the benefits of a well-regulated and well-run crypto industry could be felt across these islands.

I appreciate that I have taken up quite a lot of the time allocated for the debate. I have set out three solid areas where this Government could legislate to better realise the promise of the crypto industry, but my primary objective was to ensure that there was, for the first time, a forum for debate on the many areas for regulation of the sector. I hope that I have provided a suitable introduction to the challenges and opportunities that exist in an increasingly fast-paced industry. I look forward therefore not only to the Minister’s remarks but to what hon. Members have to say about the potential they see in making crypto work better for everybody.

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[Alexander Stafford (Rother Valley) (Con)]

I thank the hon. Member for West Dunbartonshire (Martin Docherty-Hughes) for bringing this important debate to the House, and for securing the first ever debate on crypto in the House of Commons—it is a pleasure to speak in it.

Before I start, I thank the Economic Secretary to the Treasury as well. He and I served on the Business, Energy and Industrial Strategy Committee, and he has done an amazing job over the last two months as Minister. I hope that, in the ongoing reshuffle, he is rewarded for his valiant efforts over the summer holidays.

As mentioned, today’s debate comes at a time of great change, both in Westminster and in finance. The latest game-changing financial assets continue their exponential growth. Crypto—be it NFTs, CBDCs, stablecoins, currencies like Bitcoin or Tether, or the blockchain technology that underpins it all—represents a massive opportunity for British businesses and British investors, and we cannot simply sit back as the next financial revolution comes our way.

However, there is an issue: crypto is, by its very nature, a decentralised platform, with no ties to any particular economy or region. Britain is already world renowned as the beating heart of finance, banking and markets, so it is only natural for crypto to similarly look to Britain as its home. Equally, Britain should welcome the investment and opportunities of crypto. One of the major advantages of welcoming this decentralised platform is the benefits it will bring to the whole UK—not just London and the south-east. Cryptocurrencies can be bought, sold and mined from anywhere with an internet connection—something that the last Government worked so hard to roll out across the UK, and which our new Prime Minister reaffirmed in her commitment to us all yesterday.

Crypto really is an opportunity for everyone, from Truro to Thurcroft and Rother Valley, and all the way up to Scotland and Northern Ireland. If we first fix the problems with education and regulation, I believe we will have a thriving industry here in the UK.

[Dr Cameron]

The hon. Gentleman is making an excellent speech. However, does he agree that there are concerns regarding the slowness to register companies in the UK, and issues with registration linked with the FCA at the current time, which are seeing some companies who want to be based in the UK now moving to Switzerland, France and other jurisdictions?

[Alexander Stafford]

I thank the hon. Member for her intervention and for all the hard work she is doing on this subject. She is right: we need to get these business regulated more quickly. We cannot rest on our laurels; we need to get things going, although that applies to all business, whether crypto or not. The UK needs to encourage more businesses to establish themselves more quickly, and we should have the regulations in place to make the UK accessible.

This new Government must look at increasing the level of public education around cryptocurrencies. The most common crypto-related Google search query is, “What is cryptocurrency?” That is nearly five times more common than any other. The public—from the schoolyard to the retirement home—need to be educated about the risks and rewards of this new financial asset. As with all new technology or financial tools, there clearly are risks. According to Action Fraud, nearly £150 million was scammed and stolen through crypto-related fraud last year. Educating people is the only way to ensure sensible decisions.

That being said, there are significant rewards to be gained from crypto, including instant free transactions, which will help businesses deal internationally. Meanwhile Britons will be able to transact in new ways that were previously impossible: they will be able to pay their energy bills per unit used, have their hourly wages paid on the hour or have increased privacy when paying for goods and services. Britons must be shown that the benefits are there if they approach crypto sensibly, but they must also know the risks.

That being said, given that crypto ownership is already on the rise, we cannot rely on education alone. The estimates of how many Britons own some form of cryptoassets range from 5% up to 20%, with that number clearly increasing year on year. As well as educating the public, we must rethink the regulator’s approach to cryptocurrencies. As I mentioned, there are serious risks involved in investing in crypto, even with the so-called stablecoins, as we saw with the rapid decline of Terra earlier this year. However, the current system serves only to suppress British businesses, without offering enough protection to customers and consumers.

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[Peter Grant (Glenrothes) (SNP)]

Thank you, Ms Rees, on behalf of all of us for saving this morning’s debate. It would have been a great pity if all the work that some hon. Members had put into their speeches had gone to waste. I thank my good and hon. Friend the Member for West Dunbartonshire (Martin Docherty-Hughes) for leading the debate in such a well-informed way. From conversations I have had with him, I know that although he definitely sees the huge potential benefits of cryptocurrency, he is also all too well aware of the potential pitfalls.

My hon. Friend gave us a helpful history of cryptocurrency and, importantly, reminded us that it has a particular culture that some of us might be interested in. We have to recognise that there may be certain attitudes to risk in that culture; I think he used the phrase “have fun staying poor”. If people involved in those games—and they are games for too many people—are happy to stay poor or run the risk of being poor, that is all very well. However, many people are sucked in without understanding the risk that they might suffer significant financial losses.

My hon. Friend repeatedly referred to the crypto bubble, which is an accurate description. The one thing all bubbles have in common is that they burst; we have to ensure that regulations are brought in quickly enough to stop it being a bubble before it bursts. He also pointed to flaws in the way the Financial Conduct Authority operates, on which I agree with him wholeheartedly. He referred to the collapse of Terra, whose total value went from something like $45 billion to nil in approximately 72 hours. That is how quickly things can go either well or very badly in the world of crypto.

The hon. Member for Rother Valley (Alexander Stafford) made an interesting speech. He was correct in describing Britain as the beating heart of financial services, or words to that effect; financial services are a massive part of the economy of London and the whole United Kingdom. However, I would caution him that we must recognise the fact that, although some people are in denial, Britain—London in particular—is gaining a reputation as one of the best places in the world to commit financial services fraud. If we continue to deny that and think of it as a problem that will go away, the entire future of London as a financial services centre of excellence could be in doubt.

Towards the end of his speech, the hon. Member for Rother Valley made a strange comment in response to the reminders of my hon. Friend the Member for West Dunbartonshire about the huge energy input required for crypto to operate. The hon. Gentleman said that there is no point going for a low-carbon future if that undermines our economic growth. I gently point out to him that there is no future that is not low carbon. If we do not achieve a low-carbon future, we have no future whatsoever.

The hon. Member for Strangford (Jim Shannon), who I hope I can refer to as a friend, admitted to being one of the 85% who do not own cryptocurrency. It is nice to see that he is still very much in the majority with regard to some things in Northern Ireland, although he might find that that becomes a minority at some time—who knows! We could have an interesting philosophical discussion over his wee story about the young man who made so much money on crypto, increasing £1,000 to £40,000. That is slightly more modest than others who have made gains on crypto. Where did that £39,000 come from? The world did not become £39,000 richer. The amount of money in the world did not increase by that amount during that time, so somebody somewhere was £39,000 worse off, or a lot of people were a few pounds worse off. Every time somebody makes money on a speculative investment, somebody somewhere else loses it. We have to be prepared to face up to that.

I hope the Government will take the same approach I do: clearly, cryptoassets and currencies are here to stay. We cannot uninvent them. The nature of the thing is that even if we wanted to, it would be practically impossible to legislate to keep them out of the United Kingdom all together. People we are responsible for will continue to get involved in crypto. They will invest in it, play the game and speculate on it; whatever terminology we use, they are going to put their money into crypto. We have a responsibility to ensure that when they do, they are not taking risks they do not understand or running the risk of losing money they did not realise they were liable to lose. We certainly do not want to see people losing money they cannot afford to lose.

The challenge is to maximise the very obvious potential benefits while, at the same time, minimising the risks to individuals, businesses and potentially—let’s not kid ourselves—to entire economies. This thing will get big enough that if it goes wrong, it could bring down entire economies. If it goes well, clearly it would have massive benefits for us all.

Consumer protection must be at the heart of the Government’s regulatory approach. I find the implication that consumer protection has been deprioritised in the Financial Services and Markets Bill quite concerning; it will not be one of the things to which the regulators will be instructed to give high priority. I urge the Government to ignore the siren voices of some on their own Benches who call for a completely unregulated free-for-all, which would be the way to absolute disaster for the many. There would undoubtedly be untold riches for the few, but it would be a highly irresponsible approach.

[Dr Cameron]

I thank my hon. Friend so much for giving way and for the important points he is making. I wholeheartedly agree that consumer protection must be at the forefront of the work that is taken forward. Does he agree that it is important that as many people who are interested in this sector as possible get in touch with the crypto and digital assets all-party parliamentary group, which is currently engaged in an inquiry into the sector, in order to consider regulation, recommendations and consumer protection, as well as the opportunities for growth?

[Peter Grant]

I am quite happy to take that unashamed plug for the APPG. Given that it has been mentioned and will be recorded in Hansard, I have no doubt that those who are interested in its work will take up my hon. Friend’s offer.

Crypto has all the characteristics of all the great scams in history; indeed, it has most of them on a scale that very few of those other scams had. It has the possibility to become and to facilitate the biggest scam in human history, if we let it. We need to co-operate with other jurisdictions to regulate in such a way that means that the sector continues to grow and deliver benefits, but does not expose, as I have said, either individuals or potentially whole economies to unacceptable risks.

Although I welcome the Government’s steps on regulation, which I hope will be only the first steps on a much longer journey, I am concerned that what has been offered to date has been a patchy and piecemeal approach to regulation, compared to the far more comprehensive proposals in, for example, the EU’s draft regulation. I would not expect the Government to admit it, but I worry that this is another example of settling for second best just to prove that we are different from the European Union.

We should always remind ourselves that even technological advances that end up having massive benefits for humanity can have their downside. I know a lot of people, including a lot of Members of Parliament, who are only alive today because of radiology and radiotherapy, and that would not have happened without the genius and greatness of Marie Curie, who is one of the greatest human beings ever to have lived. Marie Curie was killed by her own discovery. Indeed, almost all the people who were the first to receive the benefits of the “miracle” radium pills that followed on from her discovery died a horrible death from cancer.

The message is: let us not turn our backs on new technologies or be scared of innovation, but seize the opportunities that such technologies offer. But just as developments in scientific and medical technology can carry risks for humanity as well as huge benefits, so can advances in financial technologies. The technological advances that we are seeing just now are happening at a pace that we could not have imagined even four or five years ago. That means that regulation must be flexible and able to adapt very quickly to identify where the potential risks are and to close them down.

I would like to say that we have a Financial Conduct Authority that I am happy to trust with taking that message on board, but in my heart of hearts, as I have said both here and in the main Chamber often enough, the Financial Conduct Authority as it stands is not fit for purpose. It needs to be given a significantly stronger remit and significantly greater resources. There is no doubt that the FCA is the correct place for regulation to reside, but I ask the Minister not simply to talk about what is in the Financial Services and Markets Bill just now, but to give us an indication of how quickly the gaps in regulation that will still exist after the Bill has been passed will be filled. It is not only people who are enthusiastic about cryptocurrency who are watching this debate to see when regulation is going to become adequate; there are also people watching this debate who are looking for an opportunity to make vast sums of money at the expense of our constituents, if we allow them to do so.

[Abena Oppong-Asare (Erith and Thamesmead) (Lab)]

It is a pleasure to serve under your chairship, Ms Rees.

I congratulate the hon. Member for West Dunbartonshire (Martin Docherty-Hughes) on securing this important debate and on setting out in detail many important issues, particularly a number of matters that he raised around fraud and things that the Government can do. He has significant expertise in this area, as is evident from what he has presented in today’s debate and the fact that he chairs the all-party parliamentary group on blockchain. I thank other hon. Members who have taken part in the debate, particularly the hon. Members for Rother Valley (Alexander Stafford) and for Strangford (Jim Shannon), who raised a number of issues, such as fraud. I also thank those who have made interventions, raising consumer protection issues.

I welcome the opportunity to debate the important issue of cryptocurrencies and cryptoassets, and the Government’s regulatory approach to the industry. This debate is well overdue. In recent years, crypto has entered the mainstream, with an estimated 2.3 million people in the UK owning cryptoassets and the number of companies trading in crypto likely to grow further over the coming years, so this is a good moment to reflect on both the benefits and risks of cryptoassets and related technologies.

Many early advocates of crypto believed that it could lead to the end of central banking, the replacement of the dollar and fiat money by Bitcoin—or digital gold—and an upending of the regulation of markets and of the potential surveillance of consumers. However, crypto supporters have so far been disappointed. Like many utopian projects, this had collided with the realities of geopolitics, corporate power and illicit finance. I echo the comments made by the hon. Member for West Dunbartonshire. With reports that Russian oligarchs may have converted their assets into cryptocurrencies to avoid sanctions, many are rightly questioning whether crypto has a future at all.

In recent months, we have seen a huge crash in the value of many of the leading cryptoassets. During the recent period of crypto market turmoil, Bitcoin, Ethereum and other coins have collapsed, putting millions of UK consumers’ savings at risk. Research published by crypto trading platform Gemini found that the number of people investing in crypto has rocketed in the last 12 months, and as many as one in five people in the UK has lost money in the crypto crash. Despite this, the Government are wilfully using out-of-date data, which estimates that only 3.9% to 4.4% of British adults own crypto. I am not sure whether the Minister has more up-to-date stats. Not only that, but the Government have so far failed to properly regulate the crypto sector and protect consumers. They also have no idea how many people have been affected by the current crypto crisis, so there is clearly a desperate need for a clear strategy on the regulation of cryptoassets and blockchain technology.

Labour believes that we do not need to choose between a total crackdown on ownership of cryptocurrencies and the wild west approach advocated by some. Properly regulated blockchain technology has the potential to transform our economy and the financial services sector. Many innovative companies are embracing different forms of blockchain technology to improve transparency in order to finance and create highly skilled, high-productivity jobs across the UK. This has the potential to reduce inequalities, with £69.6 million having been invested in financial technology companies based outside London and the south-east in 2021 alone, driving efficiency in all sorts of industries.

I am afraid, however, that so far the Government have risked undermining the reputation of the sector. In the absence of a comprehensive strategy regime, the UK has become a centre for illicit crypto activity. According to research by Chainalysis, which is a global leader in blockchain research, cryptocurrency-based crime, such as terrorist financing, money laundering, fraud and scams, hit a new all-time high in 2021, with illicit activity in the UK estimated to be worth more than £500 million; that is really alarming. Despite the pressure from Labour and the financial sector, the Treasury has yet to acknowledge the scale of the threat, and the FCA has identified more than 230 unregistered cryptoasset firms operating in the UK right now. Many companies have not even applied for anti-money laundering or “know your customer” checks, yet they face little or no sanction from the Government. That has allowed some firms to exploit anonymity-enhancing technology to protect the identity of criminals and individuals linked to hostile states such as Russia.

As several Members have mentioned, there is a rise in crypto-related scams in the UK, which is very concerning, and reports of digital asset fraud were up 50% in 2021 compared with the previous year. I suspect there is even more such fraud now.

[Dr Cameron]

On the point that the shadow Minister is making, it is important that the Minister addresses the issue of potential sanctions evasion via digital currency. Also, I pay tribute to the fact that Ukraine is now one of the countries that uses most crypto, and during this horrendous wartime experience it has been able to support its economy and its troops—buying military supplies and supporting those on the frontline—through crypto. There is a mixed picture, but one that has to be addressed.

[Abena Oppong-Asare]

I support the hon. Member’s comments about Ukraine. I am not saying that using crypto should be scrapped, but the Government need to take more action to address the fact that there are issues related to the growth in fraud and in activity that is damaging to the UK. Too often, the Government have stood by and let firms responsible for these scams trade with impunity. They have continued to delay the introduction of stronger rules on the advertisement and marketing of cryptocurrency products. A survey by investment platform AJ Bell found that many crypto investors are simply unaware of the high-risk nature of their investments.

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[Richard Fuller]

Absolutely. One of the issues, which the hon. Gentleman raised in his speech, is how pervasive the technology has become since 2008. We are still looking at the different applications and different levels of the technology, as I outlined at the start of my speech, both within financial services and more broadly within Government. He mentioned the issues in Estonia and in the economy as a whole. The technology has been around for a while, but it has many tentacles that have spread in many different ways through countries and international economies.

The hon. Gentleman will also know that in addition to that growth, as he and other hon. Members have mentioned, there has been substantial volatility. Notwithstanding those market fluctuations, the potential for DLT technology underpinning cryptoassets remains powerful in many ways. Across the world, NFTs are entering common parlance. The hon. Member for Erith and Thamesmead (Abena Oppong-Asare) talked about one that could have a revolutionary impact on the creative industries.

Blockchain technology is being used in healthcare to store patients’ medical records securely; in housing to record property rights; and in supply chains to track the path and safety of food throughout the farm-to-table journey. In Government, we are developing opportunities here in the UK to use distributed ledger technology for customs and international trade, to ease the import of goods. DLT has the potential to change how our financial markets work, too. That is why new have started work to understand how it might be applied to a UK sovereign debt instrument.

Even the fundamental architecture of the internet may undergo changes as Web3 becomes more popular, with blockchain offering the potential to drive a more decentralised, user-owned ecosystem. The innovation powered by DLT could spill across society, well beyond the scope of today’s debate, which rightly focuses on financial services.

As crypto technologies grow in significance, the UK Government are seeking ways to achieve global competitive advantage for the United Kingdom. We want to become the country of choice for those looking to create, innovate and build in the crypto space. We are already the leading European fintech hub, second only to the US worldwide. By making this country a hospitable place for crypto technologies, we can attract investment, generate new jobs, benefit from tax revenues, create a wave of groundbreaking new products and services, and bridge the current position of UK financial services into a new era.

[Dr Cameron]

I thank the Minister for his important points about taking things forward in a progressive way. Given the current uncertainty in the Government sphere, while the UK is still committed to making the UK the global home of crypto, what progress has been made in establishing the cryptoasset engagement group that was announced in April, to bring on board leaders from the sector and engage positively?

[Richard Fuller]

The hon. Lady is right to mention the importance of bringing people together. I will refer to that. May I also take the opportunity to re-emphasise the work that her APPG is currently doing on regulation for consumer protection in this space? There are multiple participants and interests, so I echo her point.

At the forefront of this is something that we have talked a lot about when it comes to the culture. We have highly driven entrepreneurs with great skills. Having their teams in the UK enables us to build the wealth and experience that can power further discoveries and growth in a constructive way.

As is always the case with innovation, there are risks that need to be managed. For one, cryptoassets can be used to hide ill-gotten gains through corruption or organised crime. Since January 2020, cryptoasset firms operating in the UK have been subject to the money laundering regulations. We recently brought forward legislation to implement the financial action taskforce travel rule for the transfer of cryptoassets.

Cryptoasset firms must conduct customer due diligence checks, just as banks do, including sanctions screenings. Through the Economic Crime (Transparency and Enforcement) Bill, we will give law enforcement new powers to seize and recover cryptoassets. As would be expected of a global financial centre, we will put a very robust system in place, and will never compromise on our high standards. That was the key point made by the SNP spokesman, the hon. Member for Glenrothes (Peter Grant).

Separately, there are legitimate concerns, highlighted by the hon. Member for West Dunbartonshire and echoed by my hon. Friend the Member for Rother Valley (Alexander Stafford), about the energy intensiveness in the process of creating some types of cryptoassets. As a global centre for green finance, we are already looking closely at energy usage associated with certain crypto technologies, and I will take away the point the hon. Member for West Dunbartonshire made about carbon neutral data centres regulation.

We have also said that we will seek to protect consumers by legislating to bring certain cryptoassets into the scope of financial promotions regulation, because it is essential that investors understand the risks they are taking and that there is more transparency from firms. I know that some firms are concerned about the way in which this regime might be implemented, to the possible detriment of UK firms. We are looking very seriously at that issue.

I say in reply to the hon. Member for Erith and Thamesmead that the UK’s approach on a lot to do with financial services is to have an agile system that relies robustly on the regulators to write their rules as things are brought within the regulatory perimeter. That underpins our approach. It underpins the work in the new Financial Services and Markets Bill, and that is distinct from the perhaps more legalistic approach of the European Union trying to define in statute right from the start what the regulations should be. In the United Kingdom we trust regulators to work at speed and effectively to write the rule books that are right at that point in time.