The cryptocurrency market is looking for a better footing in 2023 following the bear market that left many crypto-related companies bankrupt – and government and regulatory attention on the sector ever sharper.
But while markets floundered, digital assets continued to inspire the launch of central bank-minted digital fiat, or central bank digital currencies (CBDCs). In the latest GBP-related news, a UK minister has said the digital pound will not be used to track retail users.
Although yet to launch, UK’s CBDC project is awaiting the publication of a consultation paper within the next few weeks.
The digital pound
The digital pound will be issued by the Bank of England, and according to Andrew Griffith, Economic Secretary to the Treasury, the CBDC will not track retail transactions.
Rather, the digital pound will help authorities gain more visibility into financial institutions and banks, the UK minister said. According to Griffith, the central bank issued digital fiat will not lead to a “surveillance state“. He told Parliament that the government will not use the digital pound platform to track user transactions.
But while authorities won’t have access to details on transactions and actions of end users, he noted that the privacy will not extend to instances of illicit activities. Measures will be taken under existing law and upcoming legislation to tackle any would-be cases of fraud or money laundering, the minister added.
In December last year, the Bank of England invited applications from companies as it sought to explore the development of a wallet for the digital pound. A budget of £200,000 has been set aside for the proof of concept wallet, with successful applicants contracted over a 5-month period expected to start on 16 January 2023.
While the BoE won’t be developing its own user wallet, it’s likely to create payment scheme rules and other guidelines for third party wallet providers. The central bank will also support core CBDC functionality through its ledger and application programming interface (API).
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