28 November 2015

Osborne looks to virtual currencies in bid to make UK world fintech capital

06 August 2014  |  7219 views  |  0 G Osborne

The UK government is setting up a review into the potential of virtual currencies, and whether they should be regulated, as part of a wider push to make the country the fintech capital of the world.

Speaking at the launch of industry body Innovate Finance, Chancellor George Osborne told a packed audience: "I'm here today because I want the UK to lead the world in developing fintech. That's my ambition - short and sweet."

One of the ways he hopes to achieve this is by turning the country into a hub for the rapidly growing cryptocurrency ecosystem. Osborne says that bitcoin and its like are popular because they are cheap, quick and convenient and that "I want to see whether we can make more use of them for the benefit of the UK economy and British consumers".

A "programme of work" will look into whether regulation should be introduced that can make it attractive for cryptocurrency firms to set up in the UK while still affording protection to people and businesses that use them.

Earlier this year HMRC decided not to levy a 20% value-added tax on bitcoin transactions, instead promising to treat crypto-currencies in the same way as other currencies.

Osborne plays with a bitcoin ATM at the Innovate Finance launch

Osborne has also tasked the government's chief scientific advisor, Sir Mark Walport, to lead a review into the future of fintech, promising to promote Britain and British businesses abroad, and to create regulatory and taxation systems that encourage innovation.

In his speech, the Chancellor highlighted alternative lending as an area where government is taking action. Peer-to-peer lending will now be allowed in ISAs, while banks that reject loan applications from SMEs will be required to ask them whether they want their information to be shared with designated online platforms that can match firms with challenger banks and alternative lenders such as crowdfunders, P2P lenders and invoice financiers.

Matthew Fell, director, competitive markets, CBI, welcomed the move, but cautioned: "It's important that small businesses seeking finance stay in control of their destiny, so these referrals must have their consent and not be automatic."

Fintech will also get backing in the form of hard cash. Osborne says that the British Business Bank has already committed over £100 million of new funding to fintech companies and to the development of new and innovative forms of finance and that another £100 million will now be put in.

Concludes the Chancellor: "We stand at the dawn of a new era in banking. Mobile banking apps, peer to peer lending, virtual currencies - technologies such as these are going to transform our lives, and create huge economic opportunities. Today I'm taking major new steps to make sure the UK leads the world in developing these exciting technologies."

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