The crypto-asset industry

Treasury Committee Closed Inquiry
Opened: 12 Jul 2022 Closed: 11 Mar 2024 Parliament page
In this inquiry, the Treasury Committee will examine the potential risks and opportunities associated with the use of crypto-assets, their impact on social inclusivity and the possible need for regulatory change in the future. Read the call for evidence to find out more about the inquiry
12 Recommendations
6 Conclusions
2 Reports
6 Letters
4 Events
Activity timeline 14 events
31 Jan
2024
Report published
25 Jan
2024
Correspondence
2 Dec
2023
Report published
20 Jul
2023
Report published
1 Jun
2023
Correspondence
17 May
2023
Report published
25 Apr
2023
Correspondence
25 Apr
2023
Correspondence
28 Feb
2023
Formal meeting (oral evidence session) · The Grimond Room, Portcullis House
26 Jan
2023
Correspondence
10 Jan
2023
Formal meeting (oral evidence session) · The Wilson Room, Portcullis House
7 Dec
2022
Formal meeting (oral evidence session) · The Grimond Room, Portcullis House
Recommendations & Conclusions
18 results
2 Recommendation Accepted
Fifteenth Report - Regulating Cryp…
Ensure FCA's cryptoasset authorisations gateway is open and effective for innovation.
It has been more than four years since our predecessor Committee’s Report called for greater regulation of the cryptoasset industry, and the FCA faces challenges in implementing existing and proposed crypto regulations. It is important that the Government and regulators … Read more
Government Response
The government agrees on keeping pace with crypto developments, highlighting existing AML-CTF and financial promotion regulations. It commits that HM Treasury and the FCA will work to clarify authorisation gateway standards and the FCA is increasing capacity and adopting a timely process for complete applications.
HM Treasury
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3 Conclusion Accepted
Fifteenth Report - Regulating Cryp…
Unclear future benefits of cryptoassets, but real risks to consumers and environment.
While we support financial innovation where there are potential benefits, the extent of the benefits cryptoasset technologies may bring to financial services in the future—and the areas in which the technologies may have the most impact— remains unclear. In the … Read more
Government Response
The government strongly agrees with a balanced, technology-neutral approach, acknowledging the uncertain benefits and evolving nature of cryptoassets. It reiterates its focus on regulating cryptoasset activity and clarifies that FMI sandboxes will be implemented this year to promote responsible innovation.
HM Treasury
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4 Recommendation Accepted
Fifteenth Report - Regulating Cryp…
Adopt balanced approach to cryptoasset development, avoiding public funding without clear use case.
We recommend that the Government takes a balanced approach to supporting the development of cryptoasset technologies. It should seek to avoid expending public resources on supporting cryptoasset activities without a clear, beneficial use case, as appears to have been the … Read more
Government Response
The government strongly agrees with a balanced, technology-neutral approach, confirming its current regulation-focused strategy. It commits to implementing the first FMI Sandbox this year to support responsible innovation and states the Royal Mint is not proceeding with the NFT, with no taxpayer money used.
HM Treasury
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5 Conclusion Accepted in Part
Fifteenth Report - Regulating Cryp…
Unbacked cryptoassets pose significant consumer risks, resembling gambling more than financial services.
Regardless of the regulatory regime, their price volatility and absence of intrinsic value means that unbacked cryptoassets will inevitably pose significant risks to consumers. Furthermore, consumer speculation in unbacked cryptoassets more closely resembles gambling than it does a financial service. … Read more
Government Response
The government acknowledges concerns about consumer risks and the 'halo effect' in unbacked cryptoassets, stating it has implemented robust measures to ensure consumers understand the high risks involved, while maintaining its financial services regulatory approach.
HM Treasury
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6 Recommendation Rejected
Fifteenth Report - Regulating Cryp…
Regulate retail trading of unbacked cryptoassets as gambling, not a financial service.
We strongly recommend that the Government regulates retail trading and investment activity in unbacked cryptoassets as gambling rather than as a financial service, consistent with its stated principle of ‘same risk, same regulatory outcome’. (Paragraph 52) Regulating Crypto 19 Read more
Government Response
The government explicitly rejects the recommendation to regulate unbacked cryptoassets as gambling, stating it would be a fundamental departure from its intended approach which aligns with international standards for financial services.
HM Treasury
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1 Conclusion Acknowledged
First Report - The digital pound: …
Potential benefits of a digital pound for the UK economy remain unclear in extent and necessity.
There are some potential benefits to the UK economy from a digital pound. A digital pound could help support innovation in domestic payments, while guarding against some of the risks posed by new forms of private digital money by maintaining … Read more
Government Response
The government acknowledges the committee's observation on potential benefits, reiterating that the design process itself will foster knowledge-sharing and collaboration, which are valuable regardless of the final decision to introduce a digital pound.
HM Treasury
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2 Conclusion Rejected
First Report - The digital pound: …
Digital pound risks UK financial stability; lower initial individual holding limits needed.
It is vital that a digital pound does not increase risks to UK financial stability and, were a digital pound to be launched, it could take some time to fully understand the impact on financial stability and the wider economy … Read more
Government Response
The government rejects the suggestion for a lower initial holding limit, stating it is minded to proceed with a £10,000-£20,000 limit for the digital pound, while remaining open to revisiting this if new information arises.
HM Treasury
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3 Recommendation Rejected
First Report - The digital pound: …
Undertake further analysis on monetary policy impact of paying interest on digital pound.
We recommend that the Bank of England and Treasury undertake further analysis on the monetary policy impact of paying interest on the digital pound, and in the meantime ensure that their design work does not preclude the possibility of paying … Read more
Government Response
The government rejects paying interest on the digital pound at launch, stating it is intended as a payment means and would be unremunerated like cash, though any future decision to revisit this would involve a full consultation.
HM Treasury
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4 Conclusion Accepted
First Report - The digital pound: …
Strong privacy safeguards are vital in the fundamental design of any digital pound.
Strong privacy safeguards would be vital were a digital pound to be introduced. Although the Bank of England and Government state that it is not their intention to be able to access users’ data, it is conceivable that they may … Read more
Government Response
The government has committed to guaranteeing users' privacy in primary legislation if a digital pound is launched, aligning with the report's emphasis on strong privacy safeguards and confirming neither the Government nor the Bank would access personal data.
HM Treasury
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5 Recommendation Accepted
First Report - The digital pound: …
Prohibit Government and Bank of England from using digital pound data beyond law enforcement.
We recommend that any primary legislation used to introduce a digital pound does not allow the Government or Bank of England to use the data from a digital pound for any purposes beyond those already permitted for law enforcement.
Government Response
The government has committed to guaranteeing users' privacy in primary legislation if a digital pound were launched, confirming neither the Government nor the Bank would have access to personal data beyond existing law enforcement permissions.
HM Treasury
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6 Conclusion Acknowledged
First Report - The digital pound: …
Concern about misuse of consumer data by digital pound wallet providers for commercial purposes.
We are also concerned about potential misuse of consumers’ data by the user-facing firms that would manage consumers’ digital pound wallets, particularly given that the commercial use of this data could form a key part of the business model for … Read more
Government Response
The government acknowledges concerns about private sector data misuse and states firms would comply with existing UK data protection laws, promising to explore privacy-enhancing designs and set out the regulatory framework in detail during the design phase.
HM Treasury
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7 Recommendation Acknowledged
First Report - The digital pound: …
Ensure transparent data collection, clear opt-outs, and robust regulation for digital pound wallet providers.
While some consumers may be content to share their personal data with payment interface providers in exchange for digital pound wallet services, there is a risk that consumers do not fully understand how their data could be used, or the … Read more
Government Response
The government acknowledges concerns about private sector data use, stating all firms would comply with existing UK data protection laws, and commits to exploring privacy-enhancing designs and detailing the regulatory framework during the design phase.
HM Treasury
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8 Recommendation Accepted
First Report - The digital pound: …
Digital pound must support financial inclusion, exploring offline payment options for accessibility.
It would be important to support financial inclusion to the greatest possible extent through a digital pound were it to be launched, including by exploring the option of offline payments to ensure accessibility by users with limited or unreliable internet … Read more
Government Response
The government has accepted the recommendation, establishing a working group to report on offline payments by year-end, and committing to conduct experiments exploring accessibility for digitally excluded users.
HM Treasury
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9 Recommendation Accepted in Part
First Report - The digital pound: …
Ensure continued support for physical cash and improve digital literacy for financial inclusion.
The Government and Bank of England must resist the temptation to believe that a digital pound can fix problems it can’t, however, and a digital pound must not make financial exclusion worse. There is a risk that the introduction of … Read more
Government Response
The government states a digital pound would complement cash and references its 2023 legislation giving the FCA powers to protect access to cash, with a new regulatory framework expected by summer 2024, but does not address digital literacy or universal access to digital pound services.
HM Treasury
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10 Recommendation Accepted
First Report - The digital pound: …
Unclear whether digital pound benefits outweigh significant privacy and financial stability risks.
This report has set out some of the benefits and risks from a digital pound. While there are some potential benefits, their extent is unclear and there are significant risks and challenges to be worked through, particularly in relation to … Read more
Government Response
The government accepts the recommendation, stating that the committee's message aligns with HM Treasury and the Bank's approach to the next design phase, which will deepen understanding and build an evidence base for a decision later this decade.
HM Treasury
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11 Recommendation Accepted in Part
First Report - The digital pound: …
Report digital pound expenditure as a separate line item in Bank of England annual accounts.
The Bank of England has already incurred significant costs from its work on a digital pound, and its further work on the design of a digital pound will require increased expenditure in the coming years. It is important that the … Read more
Government Response
The Bank acknowledges the request for transparency on digital pound costs, stating it currently reports CBDC costs within its broader fintech work, and will consider the appropriate future reporting mechanism.
HM Treasury
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12 Recommendation Accepted
First Report - The digital pound: …
Mandate a neutral and rigorous cost-benefit analysis for any digital pound launch decision.
Building the infrastructure needed for a digital pound would also likely be very expensive, and the eventual decision on whether to launch a digital pound will need to be subject to a rigorous cost-benefit analysis. The Bank of England and … Read more
Government Response
The government agrees that a balanced, transparent, and rigorous approach, from a neutral stance, is required for the cost-benefit analysis of a digital pound, which will cover economic, societal, and financial implications.
HM Treasury
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13 Recommendation Deferred
First Report - The digital pound: …
Publish detailed criteria for assessing the future launch decision of a digital pound.
To help ensure a rigorous and balanced approach is taken towards assessing the case for launching a digital pound in future, we recommend that the Government and Bank of England set out in more detail, as soon as possible, the … Read more
Government Response
The government agrees to a rigorous assessment approach but states the specific criteria and wider assessment framework for launching a digital pound are still being developed as part of the design phase, promising to report on progress and engage stakeholders.
HM Treasury
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Government Response AI assessment · 18 of 12 classified
Accepted 8
Accepted in Part 3
Acknowledged 3
Deferred 1
Rejected 3
Total 12 recs + 6 conclusions
Correspondence 6 letters
25 Jan 2024 Correspondence from HM Treasury and the Bank of England, in response to the Committee’s First Report of the Session 'The Digital Pound: Still a Solution in Search of a Problem?', dated 25 January 2024
Parliament page
1 Jun 2023 Correspondence from the Chancellor of the Exchequer regarding Commitment on Central Bank Digital Currency, dated 23 May 2023
Parliament page
25 Apr 2023 Correspondence from the Bank of England, relating to the session on ‘The crypto-asset industry’ on 28 February, dated 13 April
Parliament page
25 Apr 2023 Correspondence from the Chair to the Bank of England, relating to the session on ‘The crypto-asset industry’ on 28 February, dated 20 March
Parliament page
26 Jan 2023 Correspondence from the FCA relating to the session on ‘The crypto-asset industry’ on 7 December 2022
Parliament page
16 Nov 2022 Correspondence from Binance, relating to the session on ‘The crypto-asset industry’ on Monday 14 November, dated 15 November
Parliament page