Key Takeaways from the City of London Corporation’s Crypto Day
CryptoUK recently participated in the City Of London Corporation’s Crypto Day roundtable, together with leading industry players, think tanks, trade associations central banks, regulators and government officials.
Here are our key takeaways from the roundtable discussions.
The Bank of England (BOE) highlighted that any digital pound projects will be built on the foundations of privacy protection, convertibility and interoperability.
There was also a discussion of the Bank for International Settlement’s recent ‘Making Headway – Results of the 2022 BIS survey on Central Bank Digital Currencies and Crypto’ report. Wherein, 93% of surveyed central banks stated are considering issuing a CBDC. Specifically, the survey suggests that there could be 15 retail and 9 wholesale CBDCs publicly circulating before the end of the decade.
However, it is interesting to note that, of the first-mover jurisdictions which have already minted their own CBDCs, uptake has been low. Research from the Brussels-based economic think tank Bruegel indicates that, for the most part, these CBDCs constitute less than 1% of currency in circulation. This seems to be the result of a range of possible factors including citizens mistaking CBDC for privately issued cryptocurrency, lack of merchant acceptance and distrust in the underlying fiat itself.
The BOE will complete a 12-18 month review of real-time gross settlement (RTSG) in 2024 specifically focussing on synchronisation with other operators and additional operating hours.
Updates were provided by the Atlantic Council, a non-partisan organisation which galvanises US leadership and engagement in the world, and the Commodity Futures Trading Commission (CFTC) regarding geopolitical risks, especially from China’s use and adoption of a CBDC. Washington’s main focus is the effective implementation of sanctions packages if a Chinese CBDC becomes dominant in global trade.
There were positive comments about the work the Senate Banking and Agriculture.
Committees have done to start the legislative process for crypto. The Digital Asset Market Structure and Investor Protection Act, as it is commonly known, is part of the Responsible Financial Innovation Act. This landmark bipartisan legislation was introduced by Senators Kirsten Gillibrand (D-NY), a member of the Senate Agriculture Committee, and (Cynthia Lummis (R-WY), a member of the Senate Banking Committee.
The bill will create a complete regulatory framework for digital assets that encourages responsible financial innovation, flexibility, transparency and robust consumer protection while integrating digital assets into existing law.
As the bill is rather substantial and comprehensive the group discussed if it will get carved into smaller more manageable tranches. For example a stablecoin bill as a starter.
In summary, with a heavy presence from traditional financial institutions, the message to ensure that financial services firms are taken on the journey, and not to allow disintermediation or unbundling of services by technology, should be a key priority for the government. I however question whether the technology can or will hear this rallying cry.