UK Government Considers "Digital Pound" as Part of Push to Become Crypto Hub

The UK government is considering the introduction of a "digital pound." Andrew Griffith, economic secretary to the Treasury, disclosed the plans earlier this week, emphasising that it was part of the government's efforts to make the region a hub for the emerging crypto industry.

In a meeting with Members of Parliament (MPs), Andrew Griffith noted that the UK government was already "a long way down the road... to establish a regime for the wholesale use, for payment purposes, of stablecoins." The proposed digital pound would evidently be pegged to the Great British Pound (GBP), maintaining a 1:1 value with the currency. It would co-exist with cash and bank deposits instead of replacing them.

Mr Griffith confirmed to the Treasury Select Committee that a public consultation process on the features of the "digital pound" will go live in the coming weeks. The objective is to establish a regime that falls within the  Financial Services and Markets Bill (FSMB) currently being discussed by the parliament. Recall that the revised FSMB includes new crypto regulations – one of the first comprehensive rules for the emerging niche.

The UK's move towards launching a digital pound is not entirely surprising. Other countries, notably China and the U.S., are also researching central bank digital currency issuance. The Chinese central bank is currently in the trial phase for the rollout of its "digital yuan." 

Mr Griffith expressed optimism that embracing disruptive technologies such as blockchain only strengthens the United Kingdom's "fintech and financial sector." He argued that the technology could potentially challenge and "turbocharge all of those [financial] industries."

UK government eyes broader cryptocurrency regulation

In addition to exploring the features of the digital pound, Mr Griffith noted that the UK is also on track to launch a public consultation into Britain's general approach to regulating the cryptocurrency industry.

The consultation, when completed, will enable the Bank of England and the UK government to create appropriate safeguards for consumers investing in cryptocurrency. To achieve the right balances on future regulations, Mr Griffith said the Treasury was committed to holding at least six roundtables with cryptocurrency industry participants as part of the rules formulation process.