To ask the Chancellor of the Exchequer, what comparative assessment he has made of the Financial Conduct Authority's regulatory approach to (a) digital and (b) currencies; what recent assessment he has made of the potential effect of UK financial regulation of digital currencies on their development; what assessment he had made of the adequacy of the steps being taken to support new business and innovation in this area in the UK; and if he will make a statement.
15 July 2021
The Government is committed to retaining its global leadership position in fintech and fully recognises its important role in delivering better financial services for people and businesses. The Government also believes that, in practice, this means creating a regulatory environment in which firms can innovate, while crucially maintaining the highest regulatory standards so that people can use new technologies both reliably and safely. This is essential for continuing confidence in the financial system more broadly.
On 10 January 2020, the FCA became the anti-money laundering and counter terrorist financing (AML/CTF) supervisor for cryptoassets firms. A robust AML regime for cryptoassets will help to bolster confidence in the UK as a safe and reputable place to start and grow a cryptoasset business.
To further protect consumers, the FCA has banned the sale of cryptoasset derivatives to retail consumers, and recently issued a warning stating that consumers who invest in cryptoassets should be prepared to lose their money.
The Government has also proposed several further changes to respond to cryptoassets. On 7 January launched a consultation on its regulatory approach to cryptoassets and stablecoins. This set out the view that new and emerging forms of cryptoassets, known as stablecoins, which seek to stabilise their value, could be used as widespread means of payment and potentially deliver improvements in cross-border transactions. At the same time, depending on scale and nature of use, these developments could pose similar financial stability and consumer risks as traditional regulated payment systems.
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.
This measure is being consider alongside 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.