Tech

UK launches task force to scrutinize cryptocurrency risks and benefits

Key Points
  • The cryptocurrency task force is part of a wider financial technology strategy laid out by the U.K. government.
  • Britain will sign an agreement with Australia that enables U.K. fintech firms to sell products and services in Australia.
  • The fintech strategy also aims to create financial industry-wide standards which make it easier for fintech firms to partner with banks.

U.K. Finance Minister Philip Hammond unveiled a task force that examines the risks and benefits of cryptocurrencies on Thursday.

Hammond announced Thursday that the task force includes Britain's central bank, the Bank of England (BOE), and the Financial Conduct Authority (FCA) watchdog.

He said that the BOE and FCA would also take the "first steps" toward automating financial compliance in Britain.

The cryptocurrency task force is part of a wider fintech, or financial technology, strategy laid out by Westminster. As part of its initiative, the U.K. signed an agreement dubbed a "fintech bridge" with Australia on Thursday that will enable British fintech firms to sell products and services in Australia. The deal will also look to build cooperation on policies and regulation surrounding the sector, Hammond said.

Hammond said he wanted to make the U.K. the "most attractive home" for global fintech firms.

"Every hour a new tech business is founded in the U.K. and my aim is to make that every half hour," the minister said at a fintech conference organized by the Treasury, the U.K.'s finance department, in London.

"Our doors will always be open to the innovators and inventors," he added.

Some businesses worry the country's decision to leave the European Union — in particular, a potential exit from the single market — will damage their ability to trade freely across the bloc.

Both Britain and Australia's fintech industry bodies — Innovate Finance and Fintech Australia — will engage in regular summits aimed at advising the governments of both countries, the Treasury said.

Charlotte Crosswell, the chief executive of Innovate Finance, said the so-called fintech bridge, which was signed by Australian Treasurer Scott Morrison, offered an "excellent opportunity" for the two countries to share industry knowledge.

The U.K. government's strategy also aims to create financial industry-wide standards that make it easier for fintech firms to partner with banks.

Cryptocurrencies are a contentious issue for governments due to their decentralized nature and volatility in prices. The world's best-known cryptocurrency, bitcoin, soared to a record high close to $20,000 last year.

Bank of England Governor Mark Carney called for more regulation on the sector this month, and labeled price volatility within the space "speculative mania." The central bank's chief said last month that bitcoin has "pretty much failed" as a form of money.

In addition, Financial Conduct Authority Chief Executive Andrew Bailey has previously warned buyers of bitcoin to "be prepared to lose all your money."