The United Kingdom can experience a European first by being the first to launch its own crypto. It is a stablecoin, or CBDC, of the pound and it will only be used by the banking industry for some time.
Should the UK be the first in Europe to launch its own digital crypto, the government hopes to convince the business community that the country can become a crypto hub.
Stablecoin is the next step
After meeting with the British Parliament, Andrew Griffith, minister of Economic Affairs, confirmed that the country is likely to launch a stablecoin soon. Griffith spoke to a working group of the British Parliament’s Treasury on Tuesday, January 10, about crypto.
He says the UK is committed to making the country a global crypto hub, and that the introduction of a stablecoin would be the first step in the process. He noted that the stablecoin would be used for financial settlements between banks. Further, Griffith stated that an outside provider would necessarily issue the stablecoin.
There is a difference with CBDC though
With this, Griffith seems to be intentionally or unintentionally making a distinction between a stablecoin and a Central Bank Digital Currency (CBDC). Normally, the term stablecoin is used to describe a crypto that always tries to be worth the same amount and is issued by the private sector. Think of USDT which always tries to be worth 1 dollar and was issued by Tether.
If a digital currency is issued by a central bank, it is called a CBDC. But in this case Griffith calls the digital coin a stablecoin and not a CBDC, while the coin will be manufactured by the British central bank.
Incoming legislation on crypto
The launch of the stablecoin will go hand in hand with the Financial Markets Infrastructure Bill. Both items are included in the Financial Services and Markets Bill, which was passed in second reading in the House of Lords on January 10.
The bill gives the Financial Conduct Authority the necessary authority to regulate the cryptocurrency industry, including stablecoins. It also makes it possible to license and market new payment apps. It will take a few months for the bill to be ready.
After stablecoin, comes CBDC
Meanwhile, Griffith expects the stablecoin to lead to the introduction of a Central Bank Digital Currency. So far, a possible CBDC is not without controversy.
‘We have to get them in order. I’d rather everything be okay than us being the first. It will be an activity with a long lead time, ” he said.
Next, the Treasury will launch a public consultation to determine what a CBDC should look like.
To address privacy concerns, Griffith noted that the government will not take control if the CBDC is developed for consumers. Ultimately, this means that the government does not have access to individual transaction data. Instead, banks would be in charge of these assets and help users manage their transactions.