UK's Digital Pound: A Solution for Crypto-Privacy Concerns, Say Experts

• Privacy: The Core Concern in UK's Digital Pound Consultation
• Overview of the Digital Pound Consultation
• Platform Model to Ensure Privacy
• Legislation for Privacy Protection
• Future Steps for a Digital Pound

Privacy: The Core Concern in UK's Digital Pound Consultation

The digital pound consultation results were released by the United Kingdom on Thursday, with privacy emerging as a key concern. The UK's strategy of addressing these worries through a platform model and legislative action is predicted to alleviate these concerns, as per discussions with numerous legal and technical experts within the crypto industry.

Overview of the Digital Pound Consultation

The eagerly awaited UK consultation on a digital pound came to a close in June of the previous year. The Bank of England (BoE) and the Treasury, the finance arm of the government, unveiled the results on Thursday. The proposed design of the digital pound was well-received amongst the 50,000 responses, with privacy being the primary concern. It was generally agreed among experts that the government's strategy to address these issues could prove fruitful. Jannah Patchay, executive director and policy lead at the Digital Pound Foundation, commended the government's consistent acknowledgment of privacy concerns.

Platform Model to Ensure Privacy

The consultation response indicated a strong consensus among respondents that neither the bank nor the government should have access to personal data, yet there were doubts about this being implemented. Richard Gendal Brown, Chief Technology Officer at R3, expressed that the Bank of England's 'platform model' appears to be a viable solution to the privacy dilemma.

In this model, the central bank only provides the core infrastructure and ledger for a digital pound, while private firms act as wallet providers. These private platforms would need the identity data of wallet account holders to meet anti-money laundering regulations.

Legislation for Privacy Protection

The government has expressed that they are taking a measured approach, and a decision on a digital pound may be made between 2025 or 2026. Before introducing a digital pound, the Parliament would have to pass legislation aimed at protecting people's privacy. Varun Paul, senior director for central bank digital currency and financial market Infrastructure at Fireblocks, stated that the government's commitment to enshrining individual privacy and control in law should reassure the public.

Industry lobbying groups have expressed initial support for the government's strategy. However, it is yet unclear about the specifics of the government's legislation to protect people's privacy. The digital pound is still in its design phase, indicating that nothing is definitive, as Louise Abbott, a partner at Keystone Law, pointed out.

Future Steps for a Digital Pound

Before finalizing the digital pound's future, the government has committed to further public consultations. Brown emphasized the need for a digital pound design that keeps personally identifiable data away from the core ledger. He articulated that the goal should be an inability to access user data, not just a promise to refrain from accessing it.

Edited by Jonathan Stoker