Chancellor Philip Hammond (pictured) will announce the new measures at the government’s second International Fintech Conference held today.
The cyptoassets task force will examine the potential benefits underlying the technology while guarding against potential risks, and will consist of HM Treasury, the Bank of England, and the Financial Conduct Authority.
“I am committed to helping the sector grow and flourish, and our ambitious sector strategy sets out how we will ensure the UK remains at the cutting edge of the digital revolution,” Hammond will say.
“As part of that, a new task force will help the UK to manage the risks around cryptoassets, as well as harnessing the potential benefits of the underlying technology.”
The announcement also coincides with a speech given in March, where Sir Geoffrey Vos, chancellor of the High Court warned that the speed of developments, such as those in cryptoassets, are ushering in greater fraud risks “than ever before”.
Exponential
Nevertheless, as awareness of crypto assets grows and regulations come in, the market is set for “exponential” growth, argued Nigel Green, founder and chief executive officer of deVere Group, a financial consultancy.
Green commented: “There is a huge and growing demand for digital currencies in our increasingly digitalised world.
“The market itself is set to grow exponentially, resulting in greater usage of and investment in all the major cryptocurrencies.”
Green continued: “This growth in the market will be driven by many factors. These include that simply an increasing number of individuals, firms and organisations are becoming aware of, have a better understanding of and use cryptocurrencies.
Green added that investors will be more confident to put their capital in cryptoassets, because financial regulatory bodies around the world are increasingly looking to regulate.
However, speaking on the taskforce, a spokesperson for the FCA said it does not mean regulation will be coming into the crypto sector anytime soon.
“The idea behind the taskforce is to understand the sector more – it’s an information gathering and sharing exercise,” he said.
“We can’t pre-judge when regulation will come in, and it’s not something that will immediately change the way that underlying crypoassets perform.”
The FCA declined to comment on the potential effects of the taskforce on volatility in the crypto markets.
Regulated
The wide spanning fintech strategy will also detail ‘robo-regulation’ pilot software schemes to help financial firms deal with complex regulation faster and more efficiently.
The chancellor is expected to detail a set of industry standards to better facilitate partnerships between existing banks and fintech firms.
Matt Hancock, security of state for digital, culture, media and sport, will say: “We are determined to make Britain the best place to start and grow a digital business while giving consumers more choice when it comes to managing their money.
“This new nationwide fintech programme will help startups right across the country flourish in the future and spread the benefits of this pioneering technology.”
International
A channel for UK fintech firms eyeing international expansion will also be opened with a UK-Australia partnership aimed at harmonising relevant policies and increase regulatory cooperation.
According to HM Treasury, the UK fintech sector contributes some £6.6bn to the economy annually, and employs over 60,000 people across 1,600 companies.
Hammond added that the partnership will open the UK to a market of 24m people and enforce commercial ties with Australia’s “rapidly growing fintech sector”.
Hammond will say: “Today’s UK-Australia Fintech Bridge agreement is our most ambitious to date. It will bring together our regulators, policy makers, and private sectors to build an improved fintech ecosystem to support the growth of our fintech markets.”
