UK Commits to Becoming a Global Crypto Hub Despite FTX Collapse

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British Prime Minister Rishi Sunak has expressed his desire to strengthen the UK’s position as a hub for digital assets, distributed ledger technology and cryptocurrencies. Photo: Henry Nicholls/Pool/Reuters

The UK is still determined to become a global crypto hub despite the reputational damage the industry suffered following the collapse of the FTX exchange.

On Tuesday, MPs and financial experts weighed the potential benefits and risks for UK businesses and consumers of allowing the crypto asset industry to thrive in the UK.

Conservative MP Andrew Griffith, Economic Secretary to the Treasury, briefed the UK government’s Treasury Committee on the latest developments in crypto-assets.

Griffith said the government hopes to embrace the disruptive technology behind crypto assets such as Bitcoin (BTC-USD), Ethereum (ETH-USD) and Cardano (ADA-USD).

He added that there was “a very wide range of market forecasts that reveal the benefits to the UK economy of adopting crypto assets and its underlying technology, such as distributed ledger technology and the blockchain”.

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The committee was keen to highlight the potential risks of future government policy that could lend credibility to parts of the crypto industry, given the events of 2022, including the collapse of the crypto exchange. -FTX currency.

Griffith said: “The UK Government’s aim is to continue to seek to ensure that the UK is home to technologically advanced and well-regulated financial systems, and that there is absolutely room for this new technology in this frame.”

He added: “Recent events since 2022 have highlighted vulnerabilities and educated people on some of these practices that were taking place by some of the early entrants in the industry.

“In the crypto space, there is the emergence of a new set of technologies, such as distributed ledger technology, blockchain itself and I think it’s only fair that we should all be more humble about to our ability to predict technologies and long-term outcomes, but it would be wrong if the UK were not to be forward-thinking in seeking to make the most of new opportunities and ensuring that we have a well-calibrated regulatory response that protects consumers from the use of this new technology.”

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Griffith said the UK government wants to establish a regime for crypto assets and stablecoins that promotes growth and innovation.

Read more: FTX bankruptcy sees 80,000 UK crypto investors lose funds

He said: “We want to make sure consumers have the right information by legislating financial promotions for crypto assets.

“This will provide consumers with additional protection on top of what already exists.

“I want to see a financial regime put in place to monitor the wholesale use of stablecoins.

“The government will produce a consultation paper on the regulation of the crypto asset sector in general and in conjunction with the Bank of England on a UK central bank sovereign digital currency (CBDC).

Griffith did not give a date for the release of the consultation paper, but said it “would be coming soon, in weeks not months.”

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At the committee meeting, testimony was also provided by Laura Mountford, Deputy Director of Payments and FinTech at HM Treasury, and Daniel Rusbridge, Deputy Director of Financial Services Strategy at HM Treasury.

British Prime Minister Rishi Sunak has expressed his desire to strengthen the UK’s position as a hub for digital assets, distributed ledger technology and cryptocurrencies.

In April 2022, Sunak laid out a plan to make the UK a global hub for crypto asset technology, where, alongside former Treasury Economic Secretary John Glen, he laid out a roadmap for the future of crypto in the UK.

This included crafting new legislation for a “financial market infrastructure sandbox” that can help crypto businesses innovate.

Read more: Grayscale owner’s woes could ‘severely impact’ crypto markets, report says

As Chancellor, he oversaw a CryptoSprint led by the Financial Conduct Authority to further encourage Distributed Ledger Technology (DLT) innovation in the UK.

Blockchain technology is a key method for creating secure distributed ledger technology that is driving innovation in finance, information exchange, and “smart” contracts for multiple sectors of the economy.

Sunak oversaw an initiative with the Royal Mint to create an exclusive NFT, as well as forming an engagement group to work more closely with industry.

Last year, the Royal Mint said: “As part of the Chancellor of the Exchequer’s ambition to make the UK a global hub for crypto asset technology and investment, the Royal Mint has been asked to produce an NFT for Britain, we are delighted to do so once again to pave the way for British currency.”

Under Sunak’s budget management, the UK government has also confirmed its intention to launch a research program to explore the feasibility and potential benefits of using DLT for sovereign debt instruments.

Read more: What you need to know about crypto profits and HMRC

This included exploring ways to increase the competitiveness of the UK tax system to encourage the growth of the UK crypto-asset market.

While Chancellor Sunak has been heavily promoting the concept of “Britcoin”, a Central Bank Digital Currency (CBDC) project of the Bank of England.

In October 2021, while chairing the G7 finance ministers meeting in Washington DC, Sunak launched a set of public policy principles for retail CBDCs.

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