China. Ukraine. Saudi Arabia. These are just some of the nations that have launched Central Bank Digital Currency (CBDC) pilot projects, and dozens more are exploring the prospect—including the United Kingdom. ‘Britcoin,’ as it has been dubbed, would be a virtual money issued by the Bank of England and would form the UK Government’s response to the increasingly powerful force that is cryptocurrency. It would also be a mistake.
Research conducted by our team at Redfield & Wilton Strategies, which has been tracking the rise of cryptocurrency in countries around the world, finds that 16% of Britons report having used cryptocurrency to pay for goods and services, including as many as 1 in 3 (33%) of those aged 18 to 24. With almost a third (31%) of Britons saying they are likely to own cryptocurrency in the coming year, it is clear that cryptocurrency is no longer an obscure technology of the future, but a promising technology of the present. It is indeed time for the UK Government to embrace it as such.
But the best way to embrace this financial technology revolution is not to introduce a Government-controlled ‘Britcoin’ that is likely to be shrouded in public scepticism, if not outright hostility. Britons’ reservations about a CBDC are many and widespread, including serious concerns about privacy and the ability of the Government to seize users’ money, leading only a quarter (26%) of respondents to our poll to say they would support the introduction of a CBDC. More concerning for the Government, just 24% of those who voted Conservative in 2019 express support for ‘Britcoin.’
There is a different route that the Government would be wiser to take: to recognise the potential presented by the innovations taking place in financial technology and introduce a framework that encourages that innovation to be centred in the UK. A policy geared towards attracting brainpower, jobs, and investments is far more likely to find favour with the British public. In fact, clear pluralities of Britons indicate that they would support legislations that provide a legal framework for cryptocurrency (40%) and that encourage financial technology companies to operate in the UK (41%).
In light of the UK’s departure from the EU and its regulations—which 40% of Britons, a plurality, agree has made it easier for the UK to be on the cutting edge of financial technology innovation—the opportunity is there for the Government to take. While other nations seek to assert control over the emerging industry, introducing the right regulations that spur rather than stifle innovation could lead the UK to becoming a world leader in cryptocurrency and financial technologies.