Report: UK CBDC Will Need New Finance and Data Laws

If the United Kingdom wants to launch a digital pound, it will need to update its finance and data laws.

That’s according to a Monday (May 22) report by CoinDesk, citing interviews with a pair of lawyers as the U.K. Treasury and Bank of England (BoE) seek public feedback on their central bank digital currency (CBDC) plans.

While the government’s decision on issuing a CBDC could be years off, these attorneys said the U.K. will need new legislation that delineates the characteristics of a digital pound, per the report.

“There’s no such thing in this country as a central bank digital currency, so they would need to create new legislation around what that would look like and that’s part of the consultation process,” Louise Abbott, partner at U.K.-based Keystone Law, said, according to the report.

And George Morris, partner at Simmons & Simmons, said in the report the U.K.’s privacy and data laws would need to be amended for a CBDC.

The country’s 2018 Data Protection Act allows law enforcement to access customers’ personal data, and the government has said this law would apply to the digital pound as well, the report stated.

Morris said in the report this could be a problem, as a CBDC makes it easier to track consumers’ financial activities than with physical currency.

There are also issues related to ownership and security, Abbott said in the report.

PYMNTS reported in February that the U.K. Treasury and BoE were studying the feasibility of launching an official digital currency by the end of the decade.

The currency, which is also being referred to as both the “digital sterling” or “digital pound” — and nicknamed “Britcoin” — would be issued by the BoE and backed by the government.

Last month saw reports that the BoE had begun hiring staff for its digital currency team, with the bank’s website advertising openings for a “digital pound solutions architect” and “digital pound security architect.”

The U.K. is one of dozens of countries worldwide working on a CBDC project as money movement becomes increasingly digitized.

“There’s clearly an ecosystem building up around CBDCs,” James Wallis, vice president of central bank engagements at Ripple, told PYMNTS last week. “Truly digital money that is blockchain-based opens up a whole load of new possibilities that are just not possible with traditional money.”

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