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Britcoin – U.K. is Developing Its Own Bank-Backed Cryptocurrency
The United Kingdom’s finance minister, Rishi Sunak, has recently announced that the Bank of England is looking at creating its own, central bank-backed digital currency nicknamed ‘Britcoin’. The idea came in an effort to help tackle some of the challenges presented by Bitcoin and altcoins.
“We’re launching a new task force between the Treasury and the Bank of England to coordinate exploratory work on a potential central bank digital currency (CBDC),” Sunak announce during a fintech conference.
“Our vision is for a more open, greener, and more technologically advanced financial services sector,” the minister added, “And if we can capture the extraordinary potential of technology, we’ll cement the U.K.’s position as the world’s preeminent financial center.”
The U.K.’s Ban on Crypto
Sunak’s announcement of a central bank-backed cryptocurrency was surprising to some. Earlier this year, the Financial Conduct Authority (FCA) banned the sale of crypto derivatives to retail consumers.
The FCA considers these products to be “ill-suited” for retail clients due to the “inherent nature of the underlying assets, which means they have no reliable basis for valuation.” In addition to this, cryptocurrencies have been associated with financial crimes as well as extreme volatility.
The ban is specifically oriented towards “the sale, marketing, and distribution” to retail investors; the crypto community highly criticized the ban, considering it unreasonable.
“This ban reflects how seriously we view the potential harm to retail consumers in these products. Consumer protection is paramount here,” commented interim executive director of Strategy & Competition at the FCA, Sheldon Mills, ”We have evidence of this happening on a significant scale. The ban provides an appropriate level of protection,” he added.
The ban allegedly came following the crypto exchange BitMEX and its CEO Arthur Hayes getting charged by the U.S. authorities for violating regulations.
What happened with BitMex?
In late 2020 the founders were fined for violating the U.S. Bank Secrecy Act and accused of conspiring to violate the law by failing to implement certain anti-money laundering measures. Initially, only Samuel Reed was arrested, but eventually, Arthur Hayes turned himself in too.
“One defendant went as far as to brag the company incorporated in a jurisdiction outside the U.S. because bribing regulators in that jurisdiction cost just ‘a coconut’,” commented a representative from the FBI, “Thanks to the diligent work of our agents, analysts, and partners with the CFTC, they will soon learn the price of their alleged crimes will not be paid with tropical fruit, but rather could result in fines, restitution, and federal prison time.”
China’s digital yuan
The People’s Bank of China has been developing its own bank-back cryptocurrency, the digital yuan. Apparently, China has been working on the new coin since 2014. The country plans to implement the cryptocurrency in an effort to digitize physical money and eliminate cash since China is already very forward in its cashless payments.
“The use of cash is decreasing. Eventually, cash will be replaced by something in digital format. That is one of the big drivers behind this, ” commented China’s digital trade lead, Yan Xiao.
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