Question to the HM Treasury:

To ask Her Majesty's Government what is their response to the research by the Financial Conduct Authority Cryptoasset consumer research 2021, published on 17 June, which estimates that 2.3 million people in the UK own cryptocurrencies and that 14 per cent of those borrowed money to invest in cryptocurrencies.

The Government welcomes the FCA’s recent consumer research, which offers insights into the growth of the cryptoasset market in the UK over the past year.

The Government is closely monitoring developments in the industry through the UK’s Cryptoassets Taskforce. HM Treasury and UK authorities have taken a series of actions to mitigate risks to stability and market integrity and prevent the use of cryptoassets in illicit activity.

The Government launched a consultation on its regulatory approach to cryptoassets and stablecoins on 7 January. It also included a call for evidence on the use of Distributed Ledger Technology (DLT) in financial markets. This set out the Government’s position that new innovations in the sector could deliver substantial benefits, but also present new challenges and risks.

Last year, the Government issued a consultation on a proposal to bring certain cryptoassets, including Bitcoin, into the scope of financial promotions regulation. This would ensure that relevant cryptoasset promotions are held to the same high standards for fairness, clarity, and accuracy that pertain in the financial services industry. The Government will be publishing its response in due course.

To further protect consumers, the FCA has banned the sale of cryptoasset derivatives to retail consumers, and alongside the Bank of England has issued consumer warnings stating that consumers who invest in cryptoassets should be prepared to lose their money. Alongside this, the Government launched a new anti-money laundering and counter-terrorist financing regime for cryptoassets in 2020.