At the Treasury’s International Fintech Conference last month, John Glen spoke to Spotlight about the necessary regulations around new, disruptive technologies in the financial sector.
What value do cryptocurrencies have for the UK economy?
The purpose of the taskforce to look into it, is that we want to understand the risks and opportunities of cryptoassets and currencies, and the applications of a distributed ledger. We want to get a thorough understanding of it, so that we can then take appropriate action. More regulation may be appropriate. The Bank of England has done some worthwhile work, but we really need a joined-up piece of work that will establish what the correct response is.
When I first came into this job on 9th January [2018], I said to the Chancellor that this [cryptoassets] was something we should be looking at for this conference today, because there is a lot of uncertainty. The security around it, the implications for the fintech sector – all that needs thorough examination.
What are the risks?
I’m not necessarily saying there are any. There is a view that you need to proactively regulate in order to establish the parameters to function better and encourage its growth. Others, such as the Bank of England, say that at the level it’s operating, it has no systemic risk at all.
Do you see Bitcoin as having real value for the UK economy?
I’m obviously aware of the financial advantages that some people are accruing from it, but it wouldn’t be appropriate to prejudge the outcomes of the taskforce.
I haven’t personally purchased any crypto assets. I’ve heard that someone created a Theresa May Coin – perhaps I should start there!
Bitcoin’s ledger was found to contain images of child abuse, and it’s used to pay for illegal drugs. Should Bitcoin be incorporated into the UK economy?
These are exactly the sorts of risks that we need to examine carefully. We need to be sure that we’re aware of the ethical implications of adopting or regulating something that is working in a way that, probably, other currencies don’t.
Isn’t Bitcoin designed to be self-regulating, and to make state regulation irrelevant?
A range of jurisdictions in the world have taken different views. Some have already regulated, and we’ve got to examine why they’ve done that – does it go against the intention of it, and is it necessary?
Does the government know how much tax has gone unpaid on the money made through Bitcoin?
This government has shown a determination to reduce the tax gap. In this particular issue, I would expect the taskforce to give us a very good steer on where tax opportunities are being forsaken.
We want a fair and predictable tax system, and we want to set those taxes and make them enforceable within a global system. I think this work will feed into HMRC.
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