UK Needs New Rules To Acclimate Potential Digital Pound: Reports
Louise Abbott of Keystone Law firm recently stated that the United Kingdom government would need to implement new rules to adapt to the use of a CBDC. This is because the existing data protection, anti-money laundering, and security regulations would need to be readdressed
According to the report, two attorneys, Louise Abbott of Keystone Law, and George Morris of Simmons & Simmons pointed out during an interview that the UK would need to amend existing data and financial rules or introduce new ones to successfully acclimate to the use of a Central Bank Digital Currency.
The duo stated this observation in response to the UK Treasury and the Bank of England’s public invitation to comment on the issuance of digital pounds. Even though the UK government doesn’t have the intention to introduce any CBDC soon, it, however, relies on public opinion on it.
Crypto’s two crypto attorneys believed that since there was no CBDC in existence before, and if the UK government later decides to issue a digital pound, they have to clearly state the characteristics of the digital currency and rules that would guide its usage.
The UK Seeks To Follow The European Union’s Footstep
Meanwhile, on the other hand, the European Union is reportedly working on publishing a bill to illustrate the design and use cases of a digital euro. The bill will clearly state all the potential applications of a digital euro and the technology that would support it.
The EU has reportedly created new rules to accurately assess the potential digital euro and other digital assets. Meanwhile, the UK is still planning to follow in the EU’s footsteps by extending its existing rules on cryptos and possibly creating some for the digital pound.
The BoE and Treasury are reportedly progressing to the second phase of the digital pound project. This level is where they would define the policy and technology model of the digital currency. In addition, the regulation would also include ownership cases and security, according to Abbott.
Furthermore, Abbott pointed out that the regulators would need to define the property status of the token-based CBDC. Giving an example, he queried can a CBDC holder lend it to a commercial bank or deposit it to a bank account.
In addition, the attorney highlighted that not all laws on the digital pounds would be new. However, he said that some scenarios do not have precedent in the law data. Hence, he suggested that all financial laws should be amended to display their application to the CBDC.
Government Needs To Consider Users Data Protection
In their speech, the attorneys highlighted that the existing anti-money laundering laws and payment regulations can allow access to the digital pound wallet with little validation checks. This would help to protect users from losing funds in case a company fails to make payment.
At the digital pound debate in February, spectators questioned how the regulators want to maintain users’ liberty and privacy. Andrew Griffith, the Economic Secretary of the UK responded that it is essential that the government create a balance between freedoms and their duty of securing citizens from scams and fraud.
In addition, he said that whenever it is necessary, they would decide when to intrude on users’ privacy with proper justification.
According to reports, UK regulators want to collaborate with private companies to create a wallet for the digital pound. In addition, the consultation highlighted that companies that would like to operate using the digital pound are to obey the data protection rules which mandate firms to utilize customers’ data decently.
As per the United States 2018 Data Protection Act, law enforcers can legally access customers’ personal information from commercial bank accounts. The consultation pointed out that the same would happen to the digital sound wallet issuers too.
However, the problem here is that the digital pound makes it easier to track users’ financial data, unlike fiat money. The duo attorneys concluded that the government needs to consider a lot of factors including consumers’ data safety before deciding to issue its CBDC.
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