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Griffith expects the stablecoin to lead up to the introduction of a CBDC.
Following a meeting with the UK Parliament, the UK’s Economic Secretary to the Treasury has affirmed that the country will likely launch a stablecoin soon. Andrew Griffith stated this while speaking to the UK Parliament Treasury Committee about crypto assets on January 10.
While emphasizing the country’s commitment to becoming a global crypto hub, Griffith said introducing a stablecoin would be the first step in the process. He noted that the stablecoin would be used for wholesale settlements between banks. Further, Griffith stated that as a necessity, a third-party provider would issue the stablecoin.
The launch of the stablecoin will go hand-in-hand with the Financial Markets Infrastructure. Both items are included in the Financial Services and Markets Bill (FSMB), which passed a second reading in the House of Lords on Jan 10.
The bill, introduced in July 2022, will give the Financial Conduct Authority (FCA) the necessary authority to regulate the cryptocurrency industry, including stablecoins. It will also allow new payment apps to be licensed and introduced to the market. The bill is expected to be ready by Easter.
Stablecoin Launch Will Lead to CBDC Introduction
Meanwhile, Griffith expects the stablecoin to lead up to the introduction of a Central Bank Digital Currency. So far, the subject of a CBDC launch in the UK has raised many public policy concerns.
“We have got to get them right. I would rather be right than be first. It will be a long lead-time activity,” he said. Consequently, the Treasury will launch a public consultation to determine what it would look like to issue a CBDC. The government is also planning for at least six roundtables with the crypto sector this year.
Should the government proceed with plans for the CBDC, it would first be used in settling wholesale transactions. To quell privacy concerns, Griffith noted that the government would not be in charge if it proceeds to launch a retail CBDC. He shared that the platform “ would be an anonymized and intermediated platform by design.”
Ultimately, this means the government will not have access to individual transaction data. Instead, banks would be in charge of these assets and help users manage their transactions.
Griffith concluded that the crypto industry may be potentially disruptive and challenging, but it can also turbocharge the entire financial industry.