The UK Treasury is looking into introducing a digital pound

Representatives from the UK government cited by bbc.com revealed that they intend to establish a regime for the wholesale use, for payment purposes, of stablecoins but that this endeavour is still a long way down the road. As stablecoins are linked to traditional currencies and assets by design, the digital pound could be used by households and businesses in synergy with cash and bank deposits.

In the upcoming weeks, representatives will hold a public consultation in relation to the Financial Services and Markets Bill, which is currently being debated in Parliament, in order to establish a viable implementation path for the wholesale use of stablecoins for payment purposes. Other central banks around the world are also considering digital currency use, including the European Central Bank, which took a step towards launching a digital version of the euro in July 2021.

The current state of the crypto market sparks concerns

Following the decline of high-profile companies such as FTX, as well as the sharp decline in value of bitcoin and other crypto assets, the stability of all cryptocurrencies has been put into question. BBC reports that there will also be a public consultation regarding Britain's first general regulatory approach to crypto assets, particularly in the context of consumer protection.

It’s worth noting that this consultation will focus on research and exploration for the time being and that we’re still a few years away from witnessing any material changes. Government representatives highlighted that doing things right is more important than doing them quickly, as any errors or rushed decisions could damage the UK’s financial reputation. 

When it comes to the EU, the first comprehensive set of rules for regulating crypto markets is scheduled to receive final approval at the start of 2023 and should come into effect in 2024. 

In the UK, Labour's shadow City Minister cited by bbc.com emphasised the importance of The Bank of England exploring the potential benefits of a central bank digital currency. She also touched on the importance of building a regulatory regime that supports innovation in order to be able to take advantage of new technologies.