UK Politicians Are Seizing Crypto Amid Fears of ‘Faster, Bigger Scale’ Banking

“Order! Order! Former Speaker of the House of Commons John Bercow shouts his infamous slogan into the barrel of a camera. “Is the intelligence in the room? Stop selling!”

At the request of Crypto Boole, a Twitter account, Bercow recorded a post on video-sharing site Cameo. His message is simple: keep calm and HODL during the dive.

Celebrities are often paid to record posts on the site, but Bercow’s interest is emblematic of how the political classes are beginning to sit up and wake up to the rapid expansion of cryptocurrencies.

After an initial wave of interest from MPs – Grant Shapps dropped out of his OpenBrix role and Stephen Hammond resigned from IronX in 2018, and the Telegraph reported last year that Steve Baker had sold his stake” experimental” of bitcoin – some parliamentarians are starting to dip their toes back into the crypto ecosystem.

READ Bank of England sees flood of candidates to debate ‘Britcoin’

They did this through an all-party parliamentary group on cryptocurrencies which was launched on January 10, backed by trade body CryptoUK, complementing a group on blockchain created in 2018, itself sponsored by the Iota crypto foundation and the Stratis blockchain company.

Former Chancellor Philip Hammond made headlines late last year when he joined cryptocurrency startup Copper.

In November, responding to reports that the Bank of England asked the government whether a central bank digital currency should be “programmable”, allowing the issuer to decide how it is spent, Baker again got involved. in the crypto debate, tweeting that “surveillance by currency cannot be entertained” and “we need to push back the tide of ever-increasing state control”.

The latest MLA Register of Interests, running through January 17, shows that while MLA Yeovil Marcus Fysh held tokens on the Cardano network through May, he still has an investment in Ethereum.

But this crop of crypto-hungry MPs could see their dreams of a fi utopia thwarted by their colleagues in the House of Lords and central bank, as the issue of using crypto on a large scale has once again been mooted. spotlight this month through discussions on whether the UK should mirror moves by governments like China towards a digital book.

READ Why central bank digital currencies are facing an identity crisis

A scathing report by Lords Economic published on January 13 examined the potential benefits – or lack thereof – of introducing a CBDC in the UK, saying that privacy concerns to the potential of starting a bank or a being hacked by a malicious state, the benefits of a “Britcoin” would almost certainly be outweighed by the risks.

The UK has taken a tougher stance than some of its international peers. As the Federal Reserve’s release earlier this month of its report on the CBDC, originally expected last summer, shifts the onus back to Congress to decide whether a digital dollar is needed, it takes the US CBDC to the next level. public consultation. And some US lawmakers are also crypto fans.

READ US lawmakers pushing for light crypto rules also own digital assets

Lord Mervyn King, the former governor of the Bank of England who was also a member of the committee behind the report, doubled down on the questions he thought remained unanswered on January 18, arguing that CBDCs wouldn’t even solve the problems. cross-border payment.

Banks would be nervous about facing a “faster and bigger scale” race, he added. If retail banking customers were allowed to automatically transfer their existing credit to the CBDC, “it’s a huge risk,” and regulation could be a huge challenge, he noted.

The very next day, the current BoE Governor, Andrew Bailey, and Sir Jon Cunliffe, Deputy Governor for Financial Stability, also expressed their concerns to members of the Treasury Committee.

“Let’s be clear about the problem we’re trying to solve here… I think you have to answer that question,” Bailey said.

READ London Metals Exchange CEO moves to crypto firm

Crypto is “harder to know how to master…because we don’t have good information. It’s outside the regulated sector,” Cunliffe added.

He said the answer was “to expand regulatory regimes”.

“Token currency could disintermediate incumbent financial institutions, increase the volatility and cost of bank deposits, and replace existing payment form factors such as checks and cards,” according to a Citigroup report last year that described the stakes, adding that new systems could disrupt the cluttered payments space. “But crypto trading and custody could be a new revenue stream for financial institutions, and CBDCs could lead to more efficient and targeted implementation of monetary and fiscal policies. The race to Digital Money 2.0 is on.”

A working group jointly led by the Bank of England and the Treasury is currently exploring the merits of a CBDC. The couple will release a consultation later this year that will include their thoughts on the e-book case. Only then will they decide whether or not to move on to a development phase.

Whether they end up doing so could depend on how much influence the Lords and senior Bank officials have on their thinking, versus what MPs and the private sector might demand.

To contact the author of this story with comments or news, email Justin Cash

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