March 19, 2018 - Britain’s government and regulators will look in detail at the potential risks from cryptocurrencies like bitcoin, British junior finance minister John Glen said on Monday.
Glen said there had been an “explosion of growth” in crypto assets like bitcoin, which might pose risks even though the underlying technology has immense potential.
“In our upcoming fintech strategy, the government will announce further work with the Financial Conduct Authority and the Bank of England to consider these issues in more detail,” Glen told the Innovate Finance conference.
Britain’s finance ministry will hold its own fintech conference on Thursday.
Central bankers in Europe have called for regulation of bitcoin and initial coin offerings, or firms that raise funds by offering cryptocurrencies to investors.
But there is no global consensus on action. A meeting of central bankers and finance ministers from the Group of 20 Economies in Argentina on Monday and Tuesday is expected to agree only on more detailed monitoring rather than concrete action.
Britain is not expected to rush to impose draconian rules as it wants to remain a key financial technology, or fintech, center as European countries like France sense an opportunity to lure British firms when Britain leaves the European Union next year.
“The UK is the best place in the world for fintech and my mandate is to ensure it remains such,” said Glen, whose remit covers financial services.
“I hear rumblings across the Channel that (French) President Macron is looking to drag you all over to Paris,” Glen said.
“It’s a great city. Hop over on Eurostar and enjoy the weekend stocking up on croissants, and then come back to London on Monday morning and carry on making money and crack on as you have been.”
The Treasury Select Committee in Britain’s parliament has already launched an investigation into cryptocurrencies, and its chair said regulation needed to keep up with the pace of change as different countries compete fiercely to attract fintech firms.
“We don’t want to be dragged into a race to the bottom. Effective regulation is good for the sector and we can learn from other jurisdictions,” Nicky Morgan said.
Britain’s fintech sector enjoyed a record year in 2017, with 1.3 billion pounds invested with over half the funding from abroad, and there was no desire to shift gears or resort to complacency, Glen said.
Innovate Finance and the City of London Corporation, the municipal authority the runs the historic financial district, launched a FinTech Strategy Group on Monday.
It will bring together senior officials from the industry, banks and regulators to advise on maintaining the sector’s competitiveness.