Asked by: Lord Carlile of Berriew (Crossbench - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what steps they are taking to ensure that ISIS loses any capability to raise funds in the UK through the use of (1) non-fungible tokens (NFTs), and (2) other ways to exploit NFT technology.
Answered by Baroness Penn - Minister on Leave (Parliamentary Under Secretary of State)
The government has implemented various measures to combat terrorist financing, disrupt funding of terrorist groups, and address the illicit crypto use and emerging fintech.
This includes extending the UK’s Money Laundering Regulations (MLRs) to the cryptoasset sector in January 2020. The UK assesses cryptoasset Money Laundering and Terrorist Finance (ML/TF) risks case-by-case, allowing the FCA (Financial Conduct Authority) to regulate the rapidly evolving industry. Firms involved in activities that are described as involving Non-Fungible Tokens (NFTs) will be supervised and subject to enforcement, if they deal with cryptoassets as defined in the regulations.
Separately, the traditional art market is regulated for AML purposes so businesses dealing with NFTs which could reasonably be classified as “works of art” and meet the wider relevant criteria for supervision by HMRC, are required to comply with AML regulations to combat terrorist financing.
To prevent terrorist organisations such as ISIS exploiting blockchain technology, the UK is implementing the Financial Action Task Force’s (FATF's) 'Travel Rule') which enhances information sharing and retention for cryptoasset transfers to detect terrorist financing.
We are also updating UK CT legislation with the Economic Crime and Corporate Transparency (ECCT) Bill to prevent terrorist groups from exploiting NFT technology. This empowers law enforcement to seize, detain, freeze, and forfeit terrorist cryptoassets, with the revised definition of cryptoassets encompassing various technologies that utilize cryptography and distributed ledger technology, including NFTs.
The UK continues to engage internationally to mitigate illicit finance risks associated with cryptoassets including NFTs, and constantly reviews legislative tools to ensure we can keep pace with evolving terrorist financing threats.
Asked by: Lord Taylor of Warwick (Non-affiliated - Life peer)
Question to the Cabinet Office:
To ask His Majesty's Government what steps they are taking to manage the risks posed by their use of artificial intelligence with regards to (1) social security, (2) immigration, and (3) housing.
Answered by Baroness Neville-Rolfe - Minister of State (Cabinet Office)
It is the role of the Central Digital and Data Office (CDDO) in the Cabinet Office to establish the government's approach to new technologies.
In June 2022 as part of the Government Roadmap for Digital and Data, the government published our commitment to “systematically identify and capture opportunities arising from emerging technologies, such as artificial intelligence, blockchain and quantum computing”. CDDO has convened external experts and digital leaders across government to rapidly respond to developments in this area.
CDDO's role on Artificial Intelligence (AI) is to
establish government strategy;
ensure we have the right skills to harness AI; and
provide guidance, policy and assurance to ensure that this new technology is used effectively, to the benefit of taxpayers and communities in the UK, but safely, securely and acknowledging the risk inherent to any technologies that are new to market.
CDDO are working with colleagues from security, legal and other functions to achieve this.
The requested information relating to specific departmental risk management in the use of artificial intelligence is not centrally held. This sits with the respective departments for such policy areas, including social security, immigration and housing.
Asked by: Paula Barker (Labour - Liverpool, Wavertree)
Question to the Cabinet Office:
To ask the Minister for the Cabinet Office, what recent assessment he has made of the potential effect of the use of artificial intelligence on future levels of employment in the civil service.
Answered by Alex Burghart - Parliamentary Secretary (Cabinet Office)
The Central Digital and Data Office (CDDO), in the Cabinet Office, is working with departments to understand the full potential of Artificial Intelligence (AI), automation and service optimisation.
In June 2022 as part of the Government Roadmap for Digital and Data, the government published our commitment to “systematically identify and capture opportunities arising from emerging technologies, such as artificial intelligence, blockchain and quantum computing”. CDDO has convened external experts and digital leaders across government to rapidly respond to developments in this area.
CDDO is working with departments to establish the frameworks and policies to guide the responsible adoption of new technologies, including AI, and is already working with departments to realise opportunities in service delivery and optimisation. We are working to build a greater understanding of the potential impact of AI on Government work and efficiency which will further enhance our ability to plan future levels of employment in the civil service. Individual departments, within their own delegated authority, will be the ultimate decision maker as to the impact AI (or any other technology) has on their own levels of employment.
Asked by: Kevan Jones (Labour - North Durham)
Question to the Department for Energy Security & Net Zero:
To ask the Secretary of State for Energy Security and Net Zero, whether his Department has plans to encourage the use of blockchain technologies by business to help decarbonise the economy.
Answered by Graham Stuart
Blockchain technologies may allow trading of low-carbon energy and account for emissions of greenhouse gases to facilitate decarbonisation. However, the concepts still need to demonstrate that they could offer advantages over technology using centralised ledgers in specific applications related to decarbonisation. Several companies have been funded by the Energy Entrepreneurs Fund Programme to innovate their blockchain decarbonisation concepts further and to demonstrate applications useful to achieving net zero.
Asked by: Lisa Cameron (Conservative - East Kilbride, Strathaven and Lesmahagow)
Question to the Department for Science, Innovation & Technology:
Whether her Department is taking steps to help support the development and use of blockchain technology.
Answered by Paul Scully
In the spring 2023 Budget, the government committed to be ahead of the curve on the future of web technology, which includes Web3 and other blockchain-based technologies.
My department will work to maximise the potential of Web3 and spur UK growth and innovation, alongside empowering individuals to influence how their data is used, and minimising any harms to the economy, security, and society.
Asked by: Antony Higginbotham (Conservative - Burnley)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what steps he plans to take to support the growth of blockchain innovation in the UK.
Answered by Andrew Griffith - Minister of State (Department for Science, Innovation and Technology)
The Treasury is responsible for considering the implications of distributed ledger technology (DLT) and blockchain in the Financial Services sector; this includes activities relating to cryptoassets.
The government’s ambition is to make the UK a global hub for cryptoasset technology and investment. In April 2022, the government set out a number of reforms which will see the regulation and aspects of tax treatment of cryptoassets evolve.
The Financial Services and Markets Bill ensures that the Treasury can establish the framework for regulating cryptoassets and stablecoins. The government has consulted on the regulation of stablecoins and will consult on its approach to regulating a broader set of investment-related cryptoasset activities in due course. The government believes that having robust and effective regulation will boost innovation - by giving people and businesses the confidence they need to use new technologies safely.
The government has taken a range of broader measures to support blockchain innovation in the UK. The Treasury will set up a Financial Market Infrastructure (FMI) Sandbox in 2023, which will allow firms to experiment with new technologies and innovations, including DLT, in providing the infrastructure services that underpin markets. The Treasury is taking powers through the Financial Services and Markets Bill to implement one or more sandboxes.
The government is also exploring the use of DLT in debt instruments to ensure the UK remains at the forefront of financial technology development.
Further consultation on cryptoassets is expected to be published shortly.
Asked by: Antony Higginbotham (Conservative - Burnley)
Question to the Department for Digital, Culture, Media & Sport:
To ask the Secretary of State for Digital, Culture, Media and Sport, what steps she is taking to encourage more investment in the emerging blockchain gaming industry.
Answered by Julia Lopez - Minister of State (Department for Science, Innovation and Technology)
The Government’s ambition is to make the UK a global hub for cryptoasset technology and investment. In April 2022, the Government set out a number of reforms which will see the regulation and aspects of tax treatment of cryptoassets evolve.
The Government is committed to supporting the growth of the UK’s games sector. As part of a wider package to support the growth of the creative industries, the Government has committed to an £8 million expansion of the UK Games Fund. The UK Games Fund will continue to provide valuable support to early-stage games development and talented graduates throughout the UK. In addition, the Video Games Tax Relief continues to make the UK one of the leading destinations in the world for making video games.
Asked by: Lord Kennedy of Southwark (Labour - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what assessment they have made of the (1) operation, (2) benefits, and (3) risks, of (a) Non-Fungible Tokens (NFTs), and (b) the wider blockchain.
Answered by Baroness Penn - Minister on Leave (Parliamentary Under Secretary of State)
The Government established a Cryptoassets Taskforce in 2018, consisting of HM Treasury, the Bank of England and the Financial Conduct Authority (FCA). The Taskforce’s objectives include exploring the impact of cryptoassets, the potential benefits and challenges of Distributed Ledger Technology (DLT, which includes blockchain technology) in financial services; as well as monitoring ongoing developments in cryptoasset markets.
These crypto technologies could have a profound impact across financial services, including reducing risk, working capital, and disintermediating friction. However, there are also associated risks. As the Bank of England’s Financial Policy Committee noted, as crypto technologies grow and become more interconnected with the core financial system we’ll need to ensure that regulators have the right tools to manage the associated risks. That is why the Government is taking forward a number of regulatory initiatives to manage risks and support innovation so that people and businesses can use new technologies both reliably and safely.
The Government is putting in place a Financial Market Infrastructure (FMI) Sandbox, which will enable firms to experiment with the use of new technologies like DLT in providing the services that underpin financial markets. The Government is also exploring the possible use of DLT in the issuance and lifecycle of a sovereign debt instrument. Further details on this research programme will be set out in due course.
The non-fungible tokens (NFTs) market is evolving rapidly and remains at an early stage of development. Most NFTs are not currently subject to financial services regulation in the UK and the Government has proposed to exclude them from the financial promotions regime on the basis that NFTs can represent a wide array of different assets which might constitute non-financial services products. The Government will continue to closely monitor how NFTs are used in financial services and take further action if necessary.
Asked by: Alex Chalk (Conservative - Cheltenham)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, whether his Department is taking steps to help ensure that the regulatory framework for (a) cryptoassets and (b) blockchain technology helps facilitate investment and growth.
Answered by Andrew Griffith - Minister of State (Department for Science, Innovation and Technology)
The Government set out at Fintech Week its firm ambition to make UK a global hub for cryptoasset technology and investment. The Government wants to ensure firms can invest, innovate and scale up in this country. And the Government has announced a number of reforms which will see the regulation and aspects of tax treatment of cryptoassets evolve – our clear message to cryptoasset firms is that the UK is open for business.
These include committing to consult on a future regulatory regime; legislating to bring stablecoins into payments regulation; setting up a series of ministerial-chaired roundtables, bringing together key figures in industry; and exploring ways of enhancing the competitiveness of the UK tax system to encourage further development of the cryptoasset market in the UK.
Asked by: Baroness Uddin (Non-affiliated - Life peer)
Question to the Department for Education:
To ask Her Majesty's Government what steps they are taking to work with (1) universities, and (2) businesses, in the fields of (a) the metaverse, (b) blockchain technologies, (c) cryptocurrencies, and (d) artificial intelligence.
Answered by Baroness Barran - Parliamentary Under-Secretary (Department for Education)
The Digital Strategy announced by my hon. Friend, the Parliamentary Under-Secretary of State for Tech and the Digital Economy on the 13 June, is the roadmap we will follow to further strengthen our global position as a science and technology superpower.
The Digital Strategy will lead to new jobs, skills and services that benefit and level up the whole of the UK. It will bring tech leaders together in a new Digital Skills Council to tackle the skills gap and to carry out a review of the UK’s large-scale computer processing capabilities. The group will look at the issue of digital skills from schools through to lifelong learning and at ways the industry can inspire the next generation of talent from a wide range of backgrounds to consider a digital career.
As an illustration of our commitment to this, we announced that the Office for Students (OfS) will be providing 2,000 scholarships to ensure we has more of the advanced digital skills needed to maintain the country’s leading position in cutting-edge AI and data science. The OfS allocate up to £23 million to universities to fund scholarships starting in 2023. Funding will be available for students from low socioeconomic backgrounds as well as black, women and disabled students to ensure the AI built and used in the UK reflects the make-up of our society.
In this new landscape, businesses will be critical to supporting our ambitions. The Innovation Strategy, published by the Department for Business, Energy & Industrial Strategy in July 2021, focuses on how the government supports businesses to innovate by making the most of the UK’s research, development and innovation system.
As part of this UK Research and Innovation (UKRI) will ramp up its investment in the technologies of the future including Artificial Intelligence, digital, and advanced computing, working with businesses to crowd-in investment and create world leading sectors and job-rich industries. Over the spending review period UKRI allocation for the 2022/25 financial year is £25.1 billion and will reach its highest ever level in the 2024/25 financial year (over £8.8 billion).