UK Mulls Cryptocurrency Version Of Sterling

The UK government is laying the groundwork to develop a digital version of Sterling, as it seeks to match developments in other countries.

This development was confirmed by a Treasury official during a meeting with the UK parliament’s Treasury Select Committee.

It comes after the United Kingdom in April 2021 admitted that it was exploring the potential of creating a digital currency backed by the Bank of England.

‘Britcoin’ CBDC

Then Chancellor (now Prime Minister), Rishi Sunak asked the Bank of England and HM Treasury to look at the case for a new “Britcoin”, which has seen the joint creation of a Central Bank Digital Currency (CBDC) Taskforce to “co-ordinate the exploration of a potential UK CBDC.”

Now Reuters reported on Tuesday that Financial Services Minister Andrew Griffith has said that getting the design of a digital pound right is a bigger priority than a rapid launch.

It is reported that HM Treasury is due to launch in the coming weeks a public consultation on the attributes of a digital pound.

“The consultation is going to say this is an if and not a when. We are not fully into the inevitability of doing this,” Griffith was quoted by Reuters as telling the UK parliament’s Treasury Select Committee.

A digital pound raised many public policy issues, he reportedly said.

“We have got to get them right. I would rather be right than be first,” Griffith said. “It will be a long lead-time activity.”

The first case use of a digital pound would probably be in the settlement of wholesale financial transactions, he added.

That said, given public policy considerations for a digital currency, a wholesale, private fiat-backed stablecoin would probably get there first, Griffith said.

Griffith was quoted by Reuters as saying there will also be a public consultation in coming weeks on the UK’s first general regulatory approach to crypto assets – a controversial sector that has comes under much scrutiny in recent months.

Griffith said the UK rules could be broader to include decentralised finance.

Other countries

Last year proved to be a terrible time for crypto asset holders, after the collapse of the TerraUSD “stablecoin” in early May 2022, coupled with a crash in the value of bitcoin.

What followed next was a number of Chapter 11 bankruptcy filings from the likes of Celsius Network, Voyager Digital, then the infamous FTX, followed by BlockFi and then Core Scientific.

Yet the UK is not alone in developing its own digital currency or CBDC.

China has been testing a digital version of its yuan (digital yuan or e-CNY) since 2014 and is furthest ahead when it comes to launching CBDCs (central bank digital currency) globally.

In January 2022 China’s central bank (People’s Bank of China) launched a pilot version of a wallet app, in an effort to expanded usage of the digital version of China’s sovereign currency.

Meanwhile the European Central Bank is studying a digital euro, and the European Union is also due to publish a draft law this year to legally set up and regulate a digital euro.

In June 2022 Taiwan’s central bank said it was still working on its digital currency, but it was unclear when its CBDC (central bank digital currency) could roll out to the general public.

Japan is also looking into its own CBDC.

In February 2022, India’s central bank said it will launch a digital rupee sometime in 2022 or 2023.

Other countries are also developing regulations and rules for cryptocurrencies. Indeed, according to the Atlantic Council, ten countries have already launched central bank digital currencies and another 105 countries are exploring the option.

US Federal Reserve Chairman Jerome Powell has previously said that the development of an official digital version of the dollar could help safeguard its global dominance as other countries issue their own.

In October 2021 G7 finance ministers and central bank governors agreed cryptocurrency principles and corporate tax reforms.

The G7 finance officials also endorsed 13 public policy principles for central bank digital currencies, and stressed they should be grounded in transparency, the rule of law and sound economic governance.