Source · Select Committees · Treasury Committee
Recommendation 4
4
Accepted
Paragraph: 37
Adopt balanced approach to cryptoasset development, avoiding public funding without clear use case.
Recommendation
We recommend that the Government takes a balanced approach to supporting the development of cryptoasset technologies. It should seek to avoid expending public resources on supporting cryptoasset activities without a clear, beneficial use case, as appears to have been the case with the Royal Mint NFT. It is not the Government’s role to promote particular technological innovations for their own sake.
Government Response Summary
The government strongly agrees with a balanced, technology-neutral approach, confirming its current regulation-focused strategy. It commits to implementing the first FMI Sandbox this year to support responsible innovation and states the Royal Mint is not proceeding with the NFT, with no taxpayer money used.
Paragraph Reference:
37
Government Response
Accepted
HM Government
Accepted
HM Treasury strongly agrees with the need for a balanced and technology-neutral approach towards supporting new innovation, including cryptoasset technologies. We believe that this recommendation is consistent with the current UK Government’s approach, which is principally focused on regulating cryptoasset activity, clarifying tax treatment of cryptoasset activity, and participating in certain international organisations (such as the Financial Stability Board) to help shape and develop international standards and recommendations. The Government recognises that the benefits and use cases of unbacked cryptoassets, and their underlying technologies, are uncertain and evolving quickly. Some businesses are actively exploring the use of the underlying blockchain technology, which has the potential to boost competition, cut costs, and increase efficiencies. HM Treasury therefore agrees that, to promote responsible innovation, there can be a role for the Government in establishing a clear framework for experimentation and competition and removing barriers which might prevent benefits from being realised. With this in mind, the Government is also planning to set up Financial Market Infrastructure (FMI) sandboxes, which will enable firms to experiment with DLT and other technologies in providing the infrastructure services that underpin financial markets, potentially making markets more efficient, resilient and transparent. The first FMI Sandbox will be implemented this year, and will be run and administered by the FCA and Bank of England, which both operate independent of Government. With respect to a Royal Mint NFT, the Royal Mint is not proceeding with the launch of an NFT at this time but will keep this proposal under review. It should also be noted that no taxpayer money has been directly used to fund the project. The Royal Mint operates as a commercial business and any cost associated with developing the project was met entirely out of the Royal Mint’s own revenues.