Asked by: Philip Davies (Conservative - Shipley)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what steps his Department is taking to help ensure that companies issuing their own securities on blockchain are not all considered crypto asset service providers.
Answered by John Glen
Certain cryptoassets, offering new ways to transact and invest, are part of a trend of rapid innovation in financial technology. However, these developments also present new challenges and risks – including risks to consumers and to financial system. HM Treasury engages regularly with the Financial Conduct Authority (FCA) on opportunities, risks and regulatory issues posed by cryptoassets.
The Government established a Cryptoassets Taskforce in 2018, consisting of HM Treasury, the Bank of England and the FCA. The Cryptoasset Taskforce is responsible for assessing developments in the cryptoasset market, and deciding what, if any, regulation is required in response. HM Treasury and UK authorities, including the FCA, have taken a series of actions to support innovation while mitigating risks to stability, market integrity, and consumers. These include launching a new anti-money laundering and counter-terrorist financing regime for cryptoassets in 2020, overseen by the FCA; confirming an intention to legislate to regulate cryptoasset promotions, ensuring they are fair, clear and not misleading, the rules for which will be set by the FCA; and consulting on a proposal to ensure cryptoassets known as ‘stablecoins’ meet the same high standards expected of other payment methods. The Government will issue a response to this consultation shortly.
The Government has adopted a staged and proportionate approach to cryptoassets regulation, which is sensitive to risks posed, and responsive to new developments in the market. The Government is carefully considering what, if any, regulation might need to follow as the cryptoasset market grows and evolves in the UK.
The use of tokens to facilitate securities transactions is an important development for the financial sector. The representation of traditional securities, such as equities or debt, on a distributed ledger (the ‘tokenisation’ of assets) could have substantial implications for the way assets are traded or capital is raised. A firm or sole practitioner that issues securities on the blockchain will fall within scope of the Money Laundering Regulations (MLRs) if it provides the services of a cryptoasset exchange provider “by way of business”. To comply with the MLRs, cryptoasset firms must demonstrate systems, controls, policies and procedures adequate to deal with the particular risks of the cryptoasset market.
Asked by: Philip Davies (Conservative - Shipley)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what discussions his Department is having with the Financial Conduct Authority to ensure that the UK benefits from the potential of the digital assets sector.
Answered by John Glen
Certain cryptoassets, offering new ways to transact and invest, are part of a trend of rapid innovation in financial technology. However, these developments also present new challenges and risks – including risks to consumers and to financial system. HM Treasury engages regularly with the Financial Conduct Authority (FCA) on opportunities, risks and regulatory issues posed by cryptoassets.
The Government established a Cryptoassets Taskforce in 2018, consisting of HM Treasury, the Bank of England and the FCA. The Cryptoasset Taskforce is responsible for assessing developments in the cryptoasset market, and deciding what, if any, regulation is required in response. HM Treasury and UK authorities, including the FCA, have taken a series of actions to support innovation while mitigating risks to stability, market integrity, and consumers. These include launching a new anti-money laundering and counter-terrorist financing regime for cryptoassets in 2020, overseen by the FCA; confirming an intention to legislate to regulate cryptoasset promotions, ensuring they are fair, clear and not misleading, the rules for which will be set by the FCA; and consulting on a proposal to ensure cryptoassets known as ‘stablecoins’ meet the same high standards expected of other payment methods. The Government will issue a response to this consultation shortly.
The Government has adopted a staged and proportionate approach to cryptoassets regulation, which is sensitive to risks posed, and responsive to new developments in the market. The Government is carefully considering what, if any, regulation might need to follow as the cryptoasset market grows and evolves in the UK.
The use of tokens to facilitate securities transactions is an important development for the financial sector. The representation of traditional securities, such as equities or debt, on a distributed ledger (the ‘tokenisation’ of assets) could have substantial implications for the way assets are traded or capital is raised. A firm or sole practitioner that issues securities on the blockchain will fall within scope of the Money Laundering Regulations (MLRs) if it provides the services of a cryptoasset exchange provider “by way of business”. To comply with the MLRs, cryptoasset firms must demonstrate systems, controls, policies and procedures adequate to deal with the particular risks of the cryptoasset market.
Asked by: Philip Davies (Conservative - Shipley)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what his current policy is on the wearing of face coverings in his (a) Department, (b) departmental agencies and (c) related bodies during the covid-19 outbreak.
Answered by Kemi Badenoch - Leader of HM Official Opposition
Throughout the pandemic, the Civil Service / HM Treasury and its agencies and related bodies has followed, and continues to follow, the latest government guidance in relation to managing the risk of COVID-19 in the workplace, including any variations between the four nations of the UK.
In England, the BEIS ‘Working Safely during coronavirus (COVID-19)’ guidance provides sensible precautions employers can take to manage risk and support their staff. The guidance is available via this link: https://www.gov.uk/guidance/working-safely-during-covid-19/offices-factories-and-labs#offices-7-2.
It is for individual employers to determine which mitigations are appropriate to adopt as they review their workplace risk assessments in light of the updated guidance. Face coverings, which are no longer required by law, are one possible mitigation employers could adopt if the situation warranted it.
HM Treasury fully supports individuals who choose to wear a face covering in the workplace.
Asked by: Philip Davies (Conservative - Shipley)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment he has made of the effectiveness of the Financial Conduct Authority’s recent extension of the Temporary Registration Regime for cryptoasset businesses.
Answered by John Glen
The FCA’s competition objective, as set out in section 1E of the Financial Services and Market Act 2000 (FSMA), requires the FCA to promote effective competition in the interests of consumers in markets for regulated financial services. Activities relating to cryptoassets do not constitute regulated financial services, except where a cryptoasset qualifies as a Specified Investment under the Regulated Activities Order or is e-Money. The FCA’s competition objective therefore does not apply with respect to most markets for cryptoassets. Where a cryptoasset is a Specified Investment or e-Money, the cryptoasset business should already have been registered with the FCA for anti-money laundering supervision, independently of the new supervisory regime for cryptoasset businesses.
The FCA’s decision to extend the Temporary Registration Regime for cryptoasset businesses to 31 March 2022 will allow firms that are currently on the temporary register to continue operating whilst their applications are assessed, and preserve consumers’ access to a range of cryptoasset firms in the intervening period. This strikes an appropriate balance between mitigating the risk of money laundering in the cryptoasset sector, and ensuring that cryptoasset businesses based in the UK, and the customers they serve, are not subject to undue disruption.
Asked by: Philip Davies (Conservative - Shipley)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, with reference to section 1E of the Financial Services and Markets Act 2000 on the competition objective, what assessment he has made of the performance of the Financial Conduct Authority in respect of the anti-money laundering / counter terrorist financing registration of cryptoasset businesses.
Answered by John Glen
The FCA’s competition objective, as set out in section 1E of the Financial Services and Market Act 2000 (FSMA), requires the FCA to promote effective competition in the interests of consumers in markets for regulated financial services. Activities relating to cryptoassets do not constitute regulated financial services, except where a cryptoasset qualifies as a Specified Investment under the Regulated Activities Order or is e-Money. The FCA’s competition objective therefore does not apply with respect to most markets for cryptoassets. Where a cryptoasset is a Specified Investment or e-Money, the cryptoasset business should already have been registered with the FCA for anti-money laundering supervision, independently of the new supervisory regime for cryptoasset businesses.
The FCA’s decision to extend the Temporary Registration Regime for cryptoasset businesses to 31 March 2022 will allow firms that are currently on the temporary register to continue operating whilst their applications are assessed, and preserve consumers’ access to a range of cryptoasset firms in the intervening period. This strikes an appropriate balance between mitigating the risk of money laundering in the cryptoasset sector, and ensuring that cryptoasset businesses based in the UK, and the customers they serve, are not subject to undue disruption.
Asked by: Philip Davies (Conservative - Shipley)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if he will give overall responsibility to the Financial Conduct Authority (FCA) for maintaining a well-functioning cash system; and what discussions his Department has had with the FCA on that matter.
Answered by John Glen
The Government’s consultation on proposals for protecting access to cash for the long term will be open until 23 September 2021. Following the consultation, the Government will set out next steps for delivering on its commitment for legislating to protect access to cash.
The consultation is available at: https://www.gov.uk/government/consultations/access-to-cash-consultation.
As detailed in its consultation, the Government proposes that the Financial Conduct Authority (FCA) becomes the lead regulator for oversight of the retail cash system, including having responsibility for monitoring and enforcing new legislative cash access requirements. In adopting this approach, the Government intends that the Payment Systems Regulator (PSR) and Bank of England continue with their existing functions with regards to cash; coordinated actions by the FCA and PSR on cash as part of the COVID-19 response have shown that joint working between the regulators, at both strategic and operational levels, is working effectively.
The Government has, and continues to be, closely engaged with the FCA, PSR, Bank of England, and industry in developing its cash access proposals, including through the Joint Authorities Cash Strategy Group, which provides a forum for the public bodies to formally co-ordinate respective approaches to access to cash. The Group is chaired by HM Treasury and attended by the Bank of England, PSR, and FCA.
Asked by: Philip Davies (Conservative - Shipley)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what the Government's timetable is for publishing a draft Bill on protecting access to cash in response to its consultation on legislative proposals; and what plans he has for how that draft legislation will relate to joint work by the Financial Conduct Authority, Payment Service Regulator and banking industry to protect access to cash.
Answered by John Glen
The Government’s consultation on proposals for protecting access to cash for the long term will be open until 23 September 2021. Following the consultation, the Government will set out next steps for delivering on its commitment for legislating to protect access to cash.
The consultation is available at: https://www.gov.uk/government/consultations/access-to-cash-consultation.
As detailed in its consultation, the Government proposes that the Financial Conduct Authority (FCA) becomes the lead regulator for oversight of the retail cash system, including having responsibility for monitoring and enforcing new legislative cash access requirements. In adopting this approach, the Government intends that the Payment Systems Regulator (PSR) and Bank of England continue with their existing functions with regards to cash; coordinated actions by the FCA and PSR on cash as part of the COVID-19 response have shown that joint working between the regulators, at both strategic and operational levels, is working effectively.
The Government has, and continues to be, closely engaged with the FCA, PSR, Bank of England, and industry in developing its cash access proposals, including through the Joint Authorities Cash Strategy Group, which provides a forum for the public bodies to formally co-ordinate respective approaches to access to cash. The Group is chaired by HM Treasury and attended by the Bank of England, PSR, and FCA.
Asked by: Philip Davies (Conservative - Shipley)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, with reference to the Written Statement of 15 December 2020, HCWS652, what steps he has taken to phase out unconscious bias training in his Department.
Answered by Kemi Badenoch - Leader of HM Official Opposition
The Government does not believe that such training achieves its intended aims, and after the announcement in December, the Treasury removed all unconscious bias training and reference to it from our online learning management system. We have also stopped this being mandatory training for new starters.
Asked by: Philip Davies (Conservative - Shipley)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment he has made of the effect of the time taken to manage the anti-money laundering / counter terrorist financing registration of cryptoasset businesses by the Financial Conduct Authority on the cryptoasset industry.
Answered by John Glen
The Government is committed to retaining the UK’s global leadership position in fintech by creating a regulatory environment which promotes innovation whilst maintaining the highest regulatory standards, including for anti-money and counter-terrorist financing. Having an effective anti-money laundering and counter-terrorist financing regime underpins the competitiveness of British financial services firms and the UK as a whole, by providing confidence that our financial system is clean and safe, and that new technologies can be used both reliably and safely.
Any steps taken in light of the consultation on the Government’s regulatory approach to cryptoassets will aim to balance the potential risk to consumers with the ambition to foster competition and innovation in the sector.
In order to properly assess whether a cryptoasset firm meets the requirements for registration set out in the Money Laundering Regulations, the FCA are required to assess whether a firm and its officers, managers or beneficial owners are “fit and proper” with regard to the risk of money laundering or terrorist financing. The FCA are therefore assessing firms’ business models holistically, and it has been necessary, in many cases, for them to request additional information from the applicant firm. A significant reason for this has been that many applications have contained insufficient information on their business mode and evidence to demonstrate that the firm meets the required standard. The application process for cryptoasset firms has therefore taken longer than originally anticipated.
The mean length of time in days that a cryptoasset firm has had their application for registration under review by the FCA is 248 days. The median length of time in days that a company has had their application for registration under review is 252 days. The maximum length of time in days that a company has had their application for registration under review is 527 days.
The Government believes that the FCA’s expertise in the regulation of financial products, its membership of the Cryptoasset Taskforce, and its experience as anti-money laundering supervisor for other asset-based financial services firms makes it the right supervisor for the cryptoasset sector. As a result of the longer than anticipated time being taken to process applications, I can confirm that the FCA has increased considerably the resources allocated to assessing applications.
Asked by: Philip Davies (Conservative - Shipley)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment he has made of the effect of the time taken to manage to the anti-money laundering / counter terrorist financing registration of cryptoasset businesses by the Financial Conduct Authority on consumers.
Answered by John Glen
The Government is committed to retaining the UK’s global leadership position in fintech by creating a regulatory environment which promotes innovation whilst maintaining the highest regulatory standards, including for anti-money and counter-terrorist financing. Having an effective anti-money laundering and counter-terrorist financing regime underpins the competitiveness of British financial services firms and the UK as a whole, by providing confidence that our financial system is clean and safe, and that new technologies can be used both reliably and safely.
Any steps taken in light of the consultation on the Government’s regulatory approach to cryptoassets will aim to balance the potential risk to consumers with the ambition to foster competition and innovation in the sector.
In order to properly assess whether a cryptoasset firm meets the requirements for registration set out in the Money Laundering Regulations, the FCA are required to assess whether a firm and its officers, managers or beneficial owners are “fit and proper” with regard to the risk of money laundering or terrorist financing. The FCA are therefore assessing firms’ business models holistically, and it has been necessary, in many cases, for them to request additional information from the applicant firm. A significant reason for this has been that many applications have contained insufficient information on their business mode and evidence to demonstrate that the firm meets the required standard. The application process for cryptoasset firms has therefore taken longer than originally anticipated.
The mean length of time in days that a cryptoasset firm has had their application for registration under review by the FCA is 248 days. The median length of time in days that a company has had their application for registration under review is 252 days. The maximum length of time in days that a company has had their application for registration under review is 527 days.
The Government believes that the FCA’s expertise in the regulation of financial products, its membership of the Cryptoasset Taskforce, and its experience as anti-money laundering supervisor for other asset-based financial services firms makes it the right supervisor for the cryptoasset sector. As a result of the longer than anticipated time being taken to process applications, I can confirm that the FCA has increased considerably the resources allocated to assessing applications.