By Darren Parkin
How long will it be before the UK gets its own central bank-backed digital currency (CBDC)?
It won’t be long, in my opinion. ‘Britcoin’ is on its way – and soon.
Why am I so confident on this? For two main reasons.
First, the UK Treasury is now officially looking to appoint a Head of Central Bank Digital Currency. “The successful candidate will be responsible for leadership of HM Treasury’s work on a potential digital pound – a UK central bank digital currency (CBDC),” affirms the job advertisement that they have posted on LinkedIn.
Second, earlier this week, The Treasury said it would unveil a series of proposals to “regulate a broad suite of cryptoasset activities, consistent with its approach to traditional finance.” It will also temporarily backtrack on a previous vow to align the regulation of crypto promotions with the regulations applied to stocks, shares and insurance products.
This regulatory framework will, of course, neatly pave the way for launching the country’s own CBDC.
Prime Minister Rishi Sunak has long advocated for digital assets. When Chancellor, he announced plans to make the country “a global cryptoasset technology hub.” Later in the summer of 2021, he proposed a central bank digital currency, or “Britcoin,” to be active across the UK economy by 2025.
Of course, the UK wouldn’t be the first large, industrialised nation to launch a CBDC, and it will not be the last.
In the winter of 2022, the Beijing Winter Olympics were used to launch China’s new digital currency.
The digital yuan had already been trialled in various cities across China the year before, but the Games were the first time it was piloted on a global stage with mainly foreign users.
There were two major takeaways from what happened in Beijing.
First, digital currencies are an inevitability in the ever more digital world that we live in. When tech is driving the way we live, work, do business and much more besides, it makes sense to have money that runs on tech too.
This is, apparently, a view now shared by the UK government.
Second, the digital yuan roll out highlighted why the world will still want cryptocurrencies, such as Bitcoin.
CBDCs might have many advantages, including convenience and speed of payments, but what they do not have is privacy. Indeed, they serve to give governments even greater oversight of citizens’ transactions.
Yaya Fanusie, a senior fellow at the Center for a New American Security, said in an interview: “The government is going to be able to trace all transactions, generally, whether they are anonymised or not.” It will have even more powers to track and control how you spend, when, where and on what.
Bitcoin and cryptocurrencies, whilst still digital remain fundamentally different as they run on an open, immutable blockchain. They are global, borderless and censorship-resistant.
Moving forward, I am increasingly confident that we will have a multi-faceted system of currencies: fiat, CBDCs, and yes, crypto.
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