The UK government’s plans for a digital pound have generally been received positively by lobby groups and cryptocurrency companies, but some argue that it should be interoperable with cryptocurrencies to be truly future-proof. The proposed “platform model” would see the Bank of England (BoE) providing infrastructure for a central bank digital currency, with private companies offering integration and wallets connecting to other services.
However, as the deadline for public consultation on the digital pound approaches, stakeholders have raised concerns about user privacy, limits on holdings, and whether the currency will be designed with innovation in mind. The BoE has proposed initial limits of 10,000 to 20,000 digital pounds per person, although the International Regulatory Strategy Group has suggested a lower limit.
Smart contracts, which could enable automatic transfers, might not be hosted on the digital pound’s core ledger, but accessed through an application program interface layer. The BoE is already testing API functionalities with the Bank for International Settlements, a group of global central banks.
Lobby group CryptoUK has emphasized the importance of offline payments as a priority, allowing users consistent access to their funds. However, a truly innovative digital pound should be interoperable with cryptocurrencies, according to Varun Paul, director for CBDC at institutional crypto custody platform Fireblocks. The BIS recently shared a proposal for a unified ledger that could facilitate tokenized assets and CBDCs, but it is uncertain if such a concept would be feasible in reality.
Stakeholders have urged the government to take a cautious approach concerning privacy, with most agreeing that the BoE should not have access to users’ personal data. The government’s proposal to anonymize payment messages on the core ledger has been met with mixed reactions, with some arguing that advances in data analysis could potentially allow the data to be abused.
The decision on a digital pound is not expected until at least 2025, but gaining public trust and understanding will be crucial for its success, according to Lisa Cameron, chair of the crypto and digital assets All Party Parliamentary Group. With the future of the digital pound still subject to debate, it remains to be seen how the UK government will address these concerns and integrate cryptocurrencies into its plans.
Source: Coindesk
