UK: CBDC Won’t Replace Cash, Strict Cryptocurrency Ad Rules

Paigambar Mohan Raj
Source: Outlook India

Rishi Sunak, the Prime Minister of the United Kingdom (UK), stated last year that he wants the region to be a hub for the cryptocurrency sector. The United Kingdom has since been attempting to bring in regulation to a mostly unregulated industry.

On Tuesday, Feb. 7, the BoE (Bank of England) and HM’s Treasury will release a consultation paper on CBDCs (Central Bank Digital Currencies). Both bodies are seeking feedback and comments on how they would build a CBDC.

However, UK’s Finance Minister Jeremy Hunt has made it clear that CBDCs will not replace the pound. Nonetheless, the digital pound will usher in a new way of payment that is trusted and backed by the BoE.

Finance Minister Hunt stated,

“We want to investigate what is possible first, whilst always making sure we protect financial stability.”

Creating a government-backed alternative to privately produced stablecoins will be another significant area of focus. Big tech firms are expected to build such systems in the next few years, according to officials from the BoE and Treasury.

UK goes hard on cryptocurrency advertisements

Executives of cryptocurrency companies may face up to two years in prison for breaking recently proposed advertising regulations in the UK. The U.K. Financial Conduct Authority’s (FCA) proposal requires firms in the country and overseas to follow particular rules while advertising their services.

Cryptocurrency companies would need to receive FCA approval to market their services under the FCA’s proposed framework. Else, they would need to be excluded from the UK’s Financial Promotion Order.

There are four ways for a cryptocurrency firm to advertise its services to clients in the UK. Firstly, a person authorized by the FCA is the one who announces the promotion. Secondly, the ad can be made by an unauthorized person but approved by the FCA. Thirdly, abiding by the Money Laundering, Terrorist Financing, and Transfer of Funds (Information on the Payer) Regulations of 2017, the promotion is distributed by a crypto asset company registered with the FCA. And lastly, the promotion conforms with the Financial Promotion Order’s exemption requirements in all other respects.

Adverts made outside of these foundations will be in breach of the proposed proposal, which carries a punishment of up to 2 years.

With the rising number of scams and misleading campaigns in the cryptocurrency space, it is not surprising to see the United Kingdom take such a strict stance against advertisements. The FCA is currently awaiting its proposal to be approved in parliament.