Question to the Department for Science, Innovation & Technology:

To ask the Secretary of State for Science, Innovation and Technology, pursuant to the Answer of 21 November 2023 to Question 2866 on Land Registry: Blockchain, what steps she is taking to overcome the regulatory uncertainty associated with blockchain technologies.

The Government is committed to creating a regulatory environment in which firms can innovate, while maintaining financial stability and clear regulatory standards so that people can use new blockchain technologies both reliably and safely.

Cryptoasset markets, for example, continue to develop with increasing pace and complexity, which brings risk as well as opportunity. Risk-taking is a part of the innovation cycle, however ongoing turbulence in the cryptoasset markets has highlighted some of the implications for markets and investors. We think this reinforces the case for clear, effective, timely regulation. The Government is therefore proposing to bring a broad suite of new cryptoasset activities into the regulatory perimeter for financial services for the first time. This includes exchange activities, custody and lending.

HM Treasury launched a consultation on the Future Financial Services Regulatory Regime for Cryptoassets in February and published its response to stakeholder feedback and final proposals on 30 October. The consultation delivers on the Government’s commitment to bring forward proposals for regulating activities relating to the trading and investment of cryptoassets, such as Bitcoin.

The Government has already taken action to address risks to consumers and market integrity in cryptoasset markets. Cryptoassets were brought into scope of UK anti-money laundering legislation in 2020, and following the government’s legislation, the financial regulator has commenced enforcement for cryptoassets financial promotions, requiring them to be fair, clear and not misleading.

More broadly, my department will continue to monitor developments in the use of blockchain technology and will work with other government departments to identify where this could require the introduction of further regulation.