Question to the HM Treasury:

To ask Her Majesty's Government whether they have made any recent assessment of the future of digital currencies; and whether they have any plans to trade digital currencies.

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. The Government established a Cryptoassets Taskforce in 2018, consisting of HM Treasury, the Bank of England and the Financial Conduct Authority (FCA).

HM Treasury and UK authorities have taken a series of actions to support innovation while mitigating risks to stability and market integrity. These include launching a new anti-money laundering and counter-terrorist financing regime for cryptoassets in 2020; confirming an intention to legislate to regulate cryptoasset promotions, ensuring they are fair, clear and not misleading; 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 is carefully considering what, if any, regulation might need to follow as the cryptoasset market grows and evolves in the UK. 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 UK, like many countries globally, is actively exploring the potential role of central bank digital currency (CBDC): an electronic form of central bank money that could be used by households and businesses to make payments. The Government has taken several actions to signal its commitment to leading the global conversation on the opportunities and risks of a potential CBDC, including: the creation of a new Taskforce led by HM Treasury and the Bank of England to lead exploration of a CBDC, with separate forums to engage civil society and technology experts; a public commitment to issue a joint consultation on the use cases for a UK CBDC in 2022, followed by the publication of a technical specification; and, at the international level, using our G7 Presidency last year to develop and agree a set of public policy principles for CBDC, which are intended to support and inform exploration of CBDCs in the G7 and beyond.

The Government and the Bank of England have not yet made a decision on whether to introduce a central bank digital currency in the UK, and will engage widely with stakeholders on the benefits, risks and practicalities of doing so.

The Government has not set out any proposals to trade cryptoassets or other digital currencies.