Treasury Committee Launches an Inquiry into Crypto-assets in the UK

 

General Background

The Treasury Committee has launched an inquiry into crypto-assets in the UK.

It will come as no surprise that there is a focus on crypto-assets, especially in the light of the recent activity within the so called ‘crypto winter’ and concerns surrounding the potential use of crypto for financial crime, namely to launder funds, purchase illegal products and evade international sanctions.

The committee will seek to explore the opportunities and risks crypto-assets bring to consumers and businesses. The Committee will consider how regulation could be balanced to provide protection for consumers without stifling innovation.

 

Key Points 

The committee has given itself a wide remit and is seeking views on a multitude of areas. The following is a list that the committee is keen to seek opinion from experts particularly on the lessons the UK can learn from overseas Governments and Regulators in their approach to crypto-assets.

The inquiry will cover:

  • The role of crypto-assets in the UK, including the opportunities and risks that crypto-assets may bring to consumers, businesses and the Government (and associated bodies).
  • The potential impact of distributed ledger technology on financial institutions, including the central bank, and financial infrastructure.
    The regulatory response to crypto-assets from the Government, the FCA and the Bank of England, considering how regulation could be balanced to provide adequate protection for consumers and businesses without stifling innovation.

Written submissions are invited on the following issues:

  • To what extent are crypto-assets when used as digital currencies (such as Stablecoin) likely to replace traditional currencies?
  • What opportunities and risks would the introduction of a Bank of England Digital Currency bring?
  • What impact could the use of crypto-assets have on social inclusion?
  • Are the Government and regulators suitably equipped to grasp the opportunities presented by crypto-assets, whilst at the same time mitigating against the risks?
  • What opportunities and risks could the use of crypto-assets—including Non-Fungible Tokens—pose for individuals, the economy, and the workings of both the public and private sectors?
  • How can distributed ledger technology be applied in the financial services sector?
  • What work has the Government (and its associated bodies) done to understand, prepare for and, where relevant, encourage changes that may be brought about by increased adoption of crypto-assets?
  • How might the Government’s processes – for instance the tax system – adapt should crypto-assets be adopted more widely?
  • How effective have the regulatory measures introduced by the Government – for instance around advertising and money laundering – been in terms of increasing consumer protection around crypto-assets?
  • Is the Government striking the right balance between regulating crypto-assets to provide adequate protection for consumers and businesses and not stifling innovation?
  • Could regulation benefit crypto-asset start-ups by improving consumer trust and resilience?
  • How are Governments and regulators in other countries approaching crypto-assets, and what lessons can the UK learn from overseas?
  • The environmental and resource intensity of using crypto-asset technology.

The Future

Whist this enquiry may appear to have a particular Government/Regulatory slant, a firm wishing be involved in the crypto sector can review the requests for submissions above and apply relevant points to their own crypto involvement and review.

 

 

Please get in touch with Xcina Consulting should you require any assistance on regulatory issues

The committee has requested written evidence from any interested parties by 12th September 2022

The Treasury Press Release (with links to submit) is available here

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