UK chancellor Rishi Sunak has asked the Royal Mint to create a government-backed non-fungible token (NFT), a government minister announced today.
Sunak has requested the government-owned mint to issue the NFT – ‘one-of-a-kind’ digital assets that exist on a blockchain – by the summer as the government also explores whether it could borrow money using distributed ledger technology (DLT), economic secretary to the Treasury John Glen said in a conference address.
Delivering the keynote speech at the Innovate Finance Global Summit, Glen said that “never in the history of commerce has there been invention as hyped and misunderstood as distributed ledger technology and blockchain.”
He also announced legislative developments on so-called stablecoins and other crypto-assets as the government published its response to a consultation.
Announcing the NFT plan, which Glen described as “emblematic of the forward-looking approach we are determined to take” – with more details available “very soon” – he said the government would be exploring “whether it’s possible to apply DLT to the debt issuance process”. “Could the UK one day issue a debt instrument using DLT?”, he asked the audience, adding “I don’t yet know the answer – but let’s find out.”
The government is “already effectively using crypto-technologies to make government more efficient”, he said, explaining that it was “developing opportunities to use distributed ledger technology for customs and international trade, to ease the import of goods, and we will continue to support further opportunities to deploy that technology.”
Crypto ‘sceptics and evangelists’
Glen lauded the “extraordinary, mercurial, underlying technology that makes ‘crypto’ possible”, saying that “we can be pretty sure” it was “going to have profound effects across multiple domains”. But he acknowledged the lack of consensus on “even whether crypto itself is a good thing” with “a massive debate between the sceptics and the evangelists”.
In this vein he announced numerous of steps the UK will take to bring digital assets under greater regulatory scrutiny.
These includes plans to bring ‘certain’ stablecoins into the UK payments framework so that stablecoin issuers and service providers can “operate and grow” in the UK; establish a ‘Cryptoasset Engagement Group’ chaired at ministerial level – with senior representatives from the Financial Conduct Authority (FCA) and Bank of England, as well as the private sector; and confirming that the government will run a further consultation on wider regulation of the crypto-asset sector later this year.
He also announced that the Law Commission has been asked to consider the legal status of decentralised autonomous organisations (DAOs) – blockchain-based communities.
Glen said the government was “straining every sinew” to implement the recommendations of the landmark Treasury-commissioned ‘Fintech Strategic Review’ led by Ron Kalifa OBE, whose findings were published more than a year ago.
He said the government plans to have a ‘Financial Market Infrastructure Sandbox’, announced by the chancellor almost one year ago, in operation next year. It will be run by the Bank of England and FCA.
FCA: ‘rapidly unfolding landscape’
The FCA’s chief data, information and intelligence officer, Jessica Rusu, also spoke at the event – held at City of London’s Guildhall and part of UK Fintech Week – earlier in the day, with crypto regulation one of her own themes.
In her speech, entitled ‘Building a digital regulator: how the FCA is riding the innovation wave’, Rusu referred to the “rapidly unfolding landscape” of crypto-assets and their underlying DLT, saying that its research showed that more than two million people in the UK are invested in crypto-assets.
She said the FCA plans to launch what she referred to as ‘CryptoSprints’ and ‘APP [Authorised Push Payment] Fraud TechSprints’ in order to “help to support innovation while protecting consumers in a rapidly changing world”.
The first (two-day) CryptoSprint will be held in May, “engaging with industry to seek their ideas to inform our regulatory policy thinking” as part of “the start of a programme of industry engagement.” An APP Fraud TechSprint, run jointly with the Payment Systems Regulator, will be in September.
Rusu also announced plans for a firm support service called ‘Innovation Pathways’, which, she said, “combines and enhances” the FCA’s ‘direct support’ and ‘advice unit’ services to provide “bespoke regulatory support to firms with innovative business models that want to deliver positive innovations and consumer outcomes in the market”.
The FCA last week published a call for call for input to gather views on the potential of synthetic data to support financial services innovation. Deadline for responses is 22 June.
*** The Department for International Trade is to co-chair, alongside Innovate Finance, an International FinTech Group to convene for 12 months with a mission to strengthen the UK’s standing as a global leader in the sector. Innovate Finance also announced last week that the Singapore Economic Development Board had become a member of its ‘International Hub’.