Is the UK planning to regulate Crypto and the Blockchain?
Photo by Lina Kivaka from Pexels

Is the UK planning to regulate Crypto and the Blockchain?

By Paul Straker | Useful Blockchain | 11 Jul 2021


"...our vision puts the UK at the forefront of technology and innovation in the 21st century...

…exploring the case for a central bank digital currency with the Bank of England…

…consulting on pioneering reforms to support the safe adoption of cryptoassets and stablecoins…

…and watching closely the key debates in finance and tech, like the opportunities of distributed ledger technology in capital markets."

All the above is a direct quote from Rushi Sunak, the UK's Chancellor, in a speech on 1st July, in London.

Rishi Sunak is the UK equivalent of the US Treasury Secretary. 

Bearing in mind London's position as one of the largest financial centres in the World, this could be a key moment in the development of Cryptocurrency and Blockchain.

Why? Well, it could be that global Governments and Central Banks are starting to wake up to the world of Crypto. If so, we can see two possible outcomes: acceptance and regulation; or opposition and prohibition! 

The third option, leaving things as they are, seems unlikely to me.  If the use of Crypto-currencies continues to increase, there will be an inevitable knock on effect on banking, interest rates, liquidity, bank profitability, and so on.  For example, if tomorrow we all stopped using our bank, and used bitcoin instead, banks would start to face liquidity and capital issues pretty quickly.  And yes, that's not going to happen, but we can see why Crypto will not simply be ignored.

For the UK, we can see the Government are looking at three angles. 

First, a "Britcoin". GBP Pounds could be issued to the public or institutions on a blockchain.  It would presumably be centralised, so this is not full Crypto as most understand it. But it could improve/increase Central Bank control over the money supply, depending on your point of view!

Second, regulated Stablecoins. This could mean issuers becoming fully regulated firms, like banks, with compensation schemes for customers. 

Thirdly, Blockchain. This could mean investment banking/trading on markets being automated via smart contracts on a blockchain, potentially speeding up trades and cutting costs.

You can read the full Bank of England paper here.

What does all mean for those of us interested in the Blockchain? Well, if one of the world's largest financial centres is moving in the direction of regulation, it means that Blockchain tech is now being taken very seriously indeed 

Picture:  Photo by Lina Kivaka from Pexels.

 

 

 

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Paul Straker
Paul Straker

Crypto Newbie...


Useful Blockchain
Useful Blockchain

"Hold on lads, I've got an idea..." Nothing wrong with trading/investing. But, what if we could use the Blockchain concept to solve real world problems. Socially useful Blockchains...

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