Anti-snooping laws for Britcoin amid backlash over privacy fears

BRITONS who use digital pounds issued by the Bank of England will have their privacy “guaranteed” under new laws designed to allay snooping fears.

The move by the Bank and Treasury follows a public backlash against proposals to launch a central bank digital currency (CBDC), dubbed Britcoin, by the end of the decade.

It is understood that officials will commit to further steps to address privacy concerns in a consultation response expected in the coming weeks. Future legislation will “guarantee” the Treasury and Bank have no access to personal data and will not be able to spy on spending habits if Parliament gives it the green light.

It is also understood the joint response to the February consultation will stick to original proposals to keep holding limits at £10,000 to £20,000, despite MPS’ and banks’ concerns that such high limits could fuel bank runs and raise the risk of lenders going bust. More than 50,000 people responded to the Bank’s CBDC consultation, which was extended owing to the record replies. The proposals to introduce a digital pound by 2030 were met with widespread public concern about privacy as well as fears that cash could be scrapped.

The Bank has said that it had not yet decided whether to introduce a digital pound but that it is likely it will be needed as online transactions increase.

Staff will now press ahead with technical work associated with designing a CBDC fit for Britain. The Bank has already spent about £13m over the past two years on research and development, according to its latest annual report. While new laws to protect privacy are designed to put the public at ease, Downing Street insiders conceded that a digital pound could not offer the same anonymity as cash.

Intermediaries, such as the operators of the wallets that would hold these digital pounds, would still have to comply with data requests from police in the same way as banks currently do.

The Government has already committed to introducing primary legislation before a digital pound can be launched, giving Parliament the opportunity to vote on any final decision. MPS and Lords have already raised concerns about a digital pound. Earlier this month, the Treasury select committee urged policymakers to address financial stability risks before moving forward with the project.

The Treasury and Bank of England said in a joint statement that officials “will shortly publish the response to our consultation paper setting out the next steps”. They added: “We have always been clear a digital pound would only ever be introduced alongside cash, and that protecting individual privacy is paramount in any design.”