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UK launches cryptocurrency task force

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UK launches cryptocurrency task force

U.K. Chancellor Philip Hammond unveiled a task force to study the potential risks and benefits of cryptocurrencies.

The March 22 announcement comes days after finance ministers and central bankers gathered for the G-20 summit in Argentina, where they called for the Financial Stability Board to consult with international standard-setting bodies on cryptocurrencies and report back in July.

In addition to the U.K. Treasury, the task force will also include the Bank of England and the Financial Conduct Authority, Britain's financial watchdog. It is scheduled to report back to Hammond in the summer.

BoE Deputy Governor David Ramsden said in a speech the same day that the central bank would set up a "fintech hub," building on its earlier financial technology accelerator program and designed to contribute to the BoE/Treasury/FCA task force.

In February, the U.K. Parliament's Treasury select committee launched an inquiry into the risks and benefits of cryptocurrencies and distributed ledger technology. The inquiry was also set to scrutinize regulatory responses from the government, the BoE and the FCA.

BoE Governor Mark Carney called for more regulation for "failing" cryptocurrencies earlier in March but wrote in a letter to G-20 ministers before the summit that cryptocurrencies do not represent a threat to global financial stability.

Hammond said in the report that cryptocurrencies have been "subject to speculation which has led to significant volatility, contributing to them being risky investments." The world's most popular cryptocurrency, bitcoin, has fallen near £6,000 from its high above £14,000 in December 2017.

The chancellor noted that the distributed ledger technology, or blockchain, that underpins cryptocurrencies has wider applications, benefits he said the government is committed to exploring.

As part of the government's broader fintech strategy, Hammond also said the U.K. will sign an agreement with Australia, called the "fintech bridge," to enable British fintech firms to sell products and services in Australia. The two countries also committed to cooperate on developing their respective Open Banking regimes.