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Cryptocurrencies: Regulation

Question for Treasury

UIN HL821, tabled on 7 June 2021

To ask Her Majesty's Government what assessment they have made of a report by TheCityUK Cryptoassets: Shaping UK regulation for innovation and global leadership', published on 25 May; and what steps they are taking to encourage crypto-based innovation in the UK.

Answered on

16 June 2021

The Government welcomes TheCityUK’s contribution on the regulatory treatment of cryptoassets, including their view that the Government should take a proportionate, risk-based approach to regulation, and foster innovation.

The Government has taken a number of actions to mitigate risks and foster innovation in the cryptoasset industry.

The Government established a Cryptoassets Taskforce in 2018, consisting of HM Treasury, the Bank of England, and the Financial Conduct Authority (FCA). The Taskforce’s objectives include exploring the risks and opportunities of cryptoassets, the potential benefits and challenges of Distributed Ledger Technology (DLT) in financial services; as well as assessing what, if any, regulation is required in response.

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.

The Government launched a consultation on its regulatory approach to cryptoassets and stablecoins on 7 January. This set out the Government’s position that new innovations in the sector could deliver substantial benefits, but also present new challenges and risks.

The Government is considering responses and will outline next steps in due course. Any steps taken in light of this consultation will aim to balance the potential risk to consumers with the ambition to foster competition and innovation in the sector.

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