The UK government has not conducted a formal evaluation of the recent volatility in the cryptocurrency markets and the potential implications of its fintech sector. The House of Lords has regularly been posed with questions regarding the legality of digital assets and their impact on certain areas of the economy. The UK’s burgeoning blockchain industry could also be affected by a potential crash in the price of Bitcoin that’s been mooted amid the prospect of 160,000 Bitcoins being returned to the market by the Mt Gox cryptocurrency exchange.
Lord Taylor of Warwick recently asked what the UK government had “made of reports that the value of cryptocurrencies in the United States is falling” and the possible knock-on effects this may have on the UK’s blockchain sector. The Minister of State at the Department for International Development, Lord Bates, responded by confirming that no “formal assessment of any potential implications” had been made regarding cryptocurrencies. Lord Bates added that the government was “continuing to monitor developments” in the crypto community.
Just a week prior to Lord Bates’ comments, the Treasury’s Economic Secretary, John Glen, admitted the government had no plans to regulate, unveil or adopt cryptocurrency. Rumours have been abounding regarding the prospect of the Bank of England launching its own cryptocurrency, but this is no more forthcoming than six months ago. Even though the government acknowledges the expansion of the cryptocurrency space, based on heightened trading volumes on UK crypto exchanges and growing market capitalisation, it has no plans to recognise these digital assets as legal tender for goods and services.
To some people, it might seem a little bizarre that one of the biggest financial hubs in the world lacks an opinion either way on the cryptocurrency industry. Nevertheless, it’s important to note that the UK government did create a brand-new taskforce called the Cryptoassets Taskforce. This team was designed to debate and analyse the risks and benefits of these digital assets and applications underpinned by distributed ledger technology (DLT).
Mark Carney, Governor of the Bank of England, is struggling to come to terms with the idea of cryptocurrencies. The Canadian, who has recently been given an extended contract with the Bank of England, believes Bitcoin (BTC) – the original cryptocurrency – has “pretty much failed thus far” and is “not a store of value because it is all over the map”. If the Governor of the Bank of England cannot get on board with digital assets, it’s hard to see the government implementing significant regulations in the near future.
Of course, it’s important to note that although Bitcoin and the leading altcoins are not controlled by active regulation in the UK, certain related trading products are, such as contracts-for-difference (CFDs) orders placed on cryptocurrencies.