Legal experts have emphasized that the United Kingdom will require new legislation to introduce a central bank digital currency (CBDC).
Louise Abbott, a partner at Keystone Law, has stated that if a digital pound is to be issued, it will be necessary to amend existing regulations pertaining to data protection, security, and anti-money laundering measures.
The Bank of England and the UK Treasury are currently seeking public feedback on the design of the digital pound. Although a decision on issuing a CBDC is not expected in the near future, the country will inevitably need new legislation to define the specific characteristics of the crypto pound.
Louise Abbott expressed, “Since there is currently no form of money like a central bank digital currency, it is essential to establish a new set of regulations that govern its nature.” George Morris, a partner at Simmons & Simmons, shared a similar view, highlighting the need to clarify the legal status of CBDCs based on tokens. For instance, determining whether owners can lend their asset class to commercial banks or deposit it into regular checking accounts is of utmost importance.
Morris also pointed out the existence of data privacy laws in the UK that will likely require amendments for the launch of the digital pound.
The balance between personal freedom and the responsibility to protect citizens from fraud and other risks has been a subject of discussion, as mentioned by UK Economy Secretary Andrew Griffith.
The local government intends to involve private companies as digital wallet providers for the digital pound sterling. These organizations will be obligated to adhere to data protection laws and ensure fair utilization of individuals’ information and transaction data.