UK says digital pound will not be a crypto as consultation period begins
The UK today kicked off a consultation period for its digital pound, saying the asset is not a cryptocurrency. February 7 statement.
Treasury Secretary Jeremy Hunt said:
“Cash is here to stay, but the digital pound issued and backed by the Bank of England could become the new payment method. I want to”
The digital pound of the future is intended to be used in personal and business transactions. It is redeemable for cash and bank deposits.
The UK government has pointed out that the digital pound will become a Central Bank Digital Currency (CBDC). He distinguished CBDCs from cryptocurrencies and stablecoins, noting that the digital pound is issued by the Bank of England rather than the private sector. He also said that the digital pound will match the price of GBP, avoiding the price volatility of unbacked cryptocurrencies such as Bitcoin.
The government also noted that the digital pound will be offered alongside a digital wallet, but said the user experience would resemble a contactless payment app rather than a cryptocurrency wallet.
The UK Treasury and the Bank of England have said in an accompanying advisory letter that the digital pound’s core ledger could be built on traditional centralized databases, blockchain or distributed ledger technology (DLT). According to the text of the paper, the design of this project is “agnostic” in this respect.
The agency also said a digital pound would “likely be needed in the future”, but clarified that no decision had been made on whether to introduce such an asset.
The agency responsible for the assets is currently soliciting input from businesses, charities, payment companies and the general public. The consultation period he will open until June 7 and proceed to the design stage.
