Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment he has made of the impact of the collapse in the value of cryptocurrency on financial stability in the UK.

The Bank of England’s Financial Policy Committee (FPC) has recently noted that direct risks to the stability of the UK financial system from cryptoassets are limited. The FPC also noted that crypto-technologies are growing and becoming more interconnected with the core financial system, and the government is working to ensure that the authorities have the appropriate tools to manage associated risks.

In April the government announced a number of specific reforms to strengthen crypto asset regulation, including a commitment to bring stablecoins into payments regulation, and to consult on a wider regulatory regime later this year. Internationally, the Treasury is working through the Financial Stability Board to assess and develop supervisory and regulatory approaches to address global financial stability risks posed by cryptoassets, including market risks driven by price volatility.

The government has also announced forthcoming legislation which, along with supportive Financial Conduct Authority (FCA) rules, will regulate in-scope cryptoasset financial promotions, requiring them to be fair, clear and not misleading for consumers.

Working with the Bank of England and FCA, the Treasury will continue to monitor developments in crypto asset markets closely.