Cryptocurrencies

Baroness Kramer Excerpts

Tuesday 20th December 2022 Lords Chamber

[Lord Harlech (Con)]

I thank the noble Lord for that question. The non-fungible token market has grown considerably over the past year. New types of NFTs have emerged that blur the boundary between financial services products and digital collector items. It is not the Government’s intention to apply financial regulation to NFTs. However, the Government will consult on the details of a future regulatory regime for crypto assets in due course, and NFTs will fall under this. We stand ready to take further legislative action as required.

[Baroness Kramer (LD)]

My Lords, will the Minister look again at the consumer duty in the Financial Services and Markets Bill, recognise its woeful inadequacies and replace it with a proper duty of care? If he does not, the crypto industry will have huge scope as it is developing to sell inappropriate investments to inappropriate people without any ability to stem that activity through regulation.

[Lord Harlech (Con)]

Volatility is a characteristic of certain crypto assets. The FCA and the Bank of England have warned that crypto assets are high-risk and investors should be prepared to lose all their money. However, the Bank of England’s Financial Policy Committee continues to note that crypto asset markets do not pose a material risk to financial stability, although the stability risks will likely grow as connections between the traditional financial services sector and crypto markets increase. That is why the Treasury agrees with this assessment, which has been echoed by the Financial Stability Board.