With cryptocurrency being the phenomenon that it is, it’s not a surprise that Britain has announced a plan to establish a special “task force” for crypto assets. The initiative is part of a larger fintech (finance-technology) sector strategy. The goal of that strategy is to “help the UK manage risks around crypto assets” and harness the potential benefits of what the technology can do. Philip Hammond, UK Finance Minister had the following to say:
“I am committed to helping the sector grow and flourish, and our ambitious sector strategy sets out how we will ensure the U.K. remains at the cutting edge of the digital revolution. As part of that, a new task force will help the U.K. to manage the risks around crypto assets, as well as harnessing the potential benefits of the underlying technology.”
Who will be involved in this task force? Hammond is expected to announce the participants, but it will likely be made up of the Bank of England, the Financial Conduct Authority, and the Treasury itself. Hammond is expected to make this announcement this week, during the British government’s second International Fintech Conference. But it might not stop there. The statement also announced the governments interest in creating a UK-Australia “fintech bridge”, which would aim to connect the countries’ respective markets and help UK firms expand internationally. The goal is to help identify the UK as a leader in the fintech sector, but also to help the sector grow and flourish.
When it comes to cryptocurrency, how will this make a difference? For many years, the UK government has been broadly supportive of blockchain technology and cryptocurrencies. This is in spite of the increasing calls for regulation around cryptocurrency, so it makes sense that instead of regulating, you would convene a task force. Cryptocurrency does need some kind of mechanism to make sure that it’s being used properly. There are a lot of ways that it can be misused. But perhaps uppercase “R” regulation isn’t the answer. The downside is if there is no uppercase “R” Regulation put into effect, if someone does misuse the cryptocurrency, there is no recourse for government or the authorities. So you’re kind of stuck.
What I am interested to know more about is whether this kind of task force will be deemed appropriate in other countries. Or will cryptocurrency be “Regulated” there? If it is regulated in the other countries, will that deter crypto-business in the countries where there are Regulations? It sounds like I’m dancing around something here. But the truth is, in countries where more regulation exists, fewer businesses are likely to operate there because they have to jump through more hoops. A task force approach provides rules and guidelines, without coming down hard on businesses in an attempt to be open and inviting to this kind of technology. This is a huge emerging sector, so I am very interested to see how this plays out.