Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what steps he plans to take to support the growth of blockchain innovation in the UK.

The Treasury is responsible for considering the implications of distributed ledger technology (DLT) and blockchain in the Financial Services sector; this includes activities relating to cryptoassets.

The government’s ambition is to make the UK a global hub for cryptoasset technology and investment. In April 2022, the government set out a number of reforms which will see the regulation and aspects of tax treatment of cryptoassets evolve.

The Financial Services and Markets Bill ensures that the Treasury can establish the framework for regulating cryptoassets and stablecoins. The government has consulted on the regulation of stablecoins and will consult on its approach to regulating a broader set of investment-related cryptoasset activities in due course. The government believes that having robust and effective regulation will boost innovation - by giving people and businesses the confidence they need to use new technologies safely.

The government has taken a range of broader measures to support blockchain innovation in the UK. The Treasury will set up a Financial Market Infrastructure (FMI) Sandbox in 2023, which will allow firms to experiment with new technologies and innovations, including DLT, in providing the infrastructure services that underpin markets. The Treasury is taking powers through the Financial Services and Markets Bill to implement one or more sandboxes.

The government is also exploring the use of DLT in debt instruments to ensure the UK remains at the forefront of financial technology development.

Further consultation on cryptoassets is expected to be published shortly.