Back in April 2022 the UK Government announced its landmark vision for the UK to become a global hub for cryptocurrency and digital assets.
Since then countries around the world have been grappling with the challenge of how to respond to this rapidly growing industry, and for many Governments, how to balance growth and innovation with the need to protect against the potential risks.
For many it is now abundantly clear that cryptocurrency is here to stay. The simple reality is that cryptocurrency is now seen by many as an alternative to mainstream investments with at least 2.3 million people in the UK alone saying that they own some form of cryptocurrency.
For Governments around the world, including here in the UK, the question is now how best to regulate and how quickly. For policymakers like myself, and my colleagues in Westminster, it is important that we as legislators upskill ourselves on this new and emerging technology in order to ensure that we have an informed debate on how the UK should move forward and to make sure that the rules we put in place are fit for purpose.
Earlier this year the Crypto and Digital Assets All Party Parliamentary Group in Westminster which I Chair published its first report following a 10 month long inquiry into the industry. This was the first report of its kind into the sector which was compiled jointly by members of the House of Commons and the House of Lords.
The Prime Minister has made it clear that he wants the UK to be at the forefront of these high growth emerging technologies
As with all new and emerging technologies including cryptocurrency there are potential risks that Government must seek to minimise. Nevertheless we are also increasingly seeing some of the potential benefits that the growth of cryptocurrency can bring for the UK, and in some cases how cryptocurrency can even be a force for good.
The Prime Minister has made it clear that he wants the UK to be at the forefront of these high growth emerging technologies like cryptocurrency which can not only drive growth for the UK economy, but also boost jobs and skills in regions right across the UK. PwC estimates that Blockchain technology can boost global GDP by $1.76trn by the end of this decade, with £57bn to be generated from the UK alone.
Cryptocurrency and digital assets also present a number of potential opportunities to improve our existing payments and financial services systems, by removing costs, improving speed and allowing greater transparency.
Cryptocurrency could help to improve financial inclusion for the 1.2 million people in the UK who do not have access to a bank account and cryptocurrencies and digital assets can improve the UK’s approach to international aid by facilitating fast and unencumbered donations in times of global humanitarian crises. We have seen this following the Russian invasion of Ukraine when the Ukrainian Government appealed for cryptocurrency donations to support military and humanitarian efforts on the frontline.
Whilst it's important that we seek to harness the potential benefits from the growth of cryptocurrency, equally it is vital that Governments are also alive to the potential risks and take steps to minimise these including risks to consumer protection and economic crime.
The UK is well positioned to seize the opportunities presented from this growing industry. We are renowned in the UK for being a leader on the global stage when it comes to financial services and in more recent years in fintech. With the right regulatory approach the same can be true for the UK’s cryptocurrency and digital asset industry.
Post Brext, the UK has a real opportunity to forge its own path when it comes to cryptocurrency regulation and ensure that we remain competitive as a country and give a clear signal to industry that the UK is open for cryptocurrency and digital asset businesses.
As Europe, the US and others develop their own regulatory frameworks for cryptocurrency the UK is well placed to be able to provide the regulatory clarity and business certainty required for those firms looking to set up and scale up in the UK. It will be regulation that is key to unlocking investment and growth in this industry across all regions of the UK.
Lisa Cameron is a Conservative MP and chair of the Crypto and Digital Assets APPG
