Cryptocurrencies

(asked on 8th February 2022) - View Source

Question to the HM Treasury:

To ask the Chancellor of the Exchequer, if his Department will have discussions with the Financial Conduct Authority on the merits that digital assets can bring to UK economy.


Answered by
John Glen Portrait
John Glen
Paymaster General and Minister for the Cabinet Office
This question was answered on 16th February 2022

Certain cryptoassets, offering new ways to transact and invest, are part of a trend of rapid innovation in financial technology. However, these developments also present new challenges and risks – including risks to consumers and to financial system. HM Treasury engages regularly with the Financial Conduct Authority (FCA) on opportunities, risks and regulatory issues posed by cryptoassets.

The Government established a Cryptoassets Taskforce in 2018, consisting of HM Treasury, the Bank of England and the FCA. The Cryptoasset Taskforce is responsible for assessing developments in the cryptoasset market, and deciding what, if any, regulation is required in response. HM Treasury and UK authorities, including the FCA, have taken a series of actions to support innovation while mitigating risks to stability, market integrity, and consumers. These include launching a new anti-money laundering and counter-terrorist financing regime for cryptoassets in 2020, overseen by the FCA; confirming an intention to legislate to regulate cryptoasset promotions, ensuring they are fair, clear and not misleading, the rules for which will be set by the FCA; and consulting on a proposal to ensure cryptoassets known as ‘stablecoins’ meet the same high standards expected of other payment methods. The Government will issue a response to this consultation shortly.

The Government has adopted a staged and proportionate approach to cryptoassets regulation, which is sensitive to risks posed, and responsive to new developments in the market.  The Government is carefully considering what, if any, regulation might need to follow as the cryptoasset market grows and evolves in the UK.

The use of tokens to facilitate securities transactions is an important development for the financial sector. The representation of traditional securities, such as equities or debt, on a distributed ledger (the ‘tokenisation’ of assets) could have substantial implications for the way assets are traded or capital is raised. A firm or sole practitioner that issues securities on the blockchain will fall within scope of the Money Laundering Regulations (MLRs) if it provides the services of a cryptoasset exchange provider “by way of business”. To comply with the MLRs, cryptoasset firms must demonstrate systems, controls, policies and procedures adequate to deal with the particular risks of the cryptoasset market.

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