Louise Abbott of the law firm Keystone recently stated that the United Kingdom government would need to implement new regulations to accommodate the use of a CBDC. This is due to the fact that extant data protection, anti-money laundering, and security regulations would need to be revised.

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In response to a public invitation from the UK Treasury and the Bank of England to comment on the issuance of digital pounds, the duo made this observation. Even though the UK government has no intention of introducing a CBDC in the near future, it relies on public opinion on the matter.

Crypto's two crypto attorneys believed that since there had never been a CBDC before, and if the UK government decides to issue a digital pound in the future, they must clearly define the characteristics and usage rules of the digital currency.

The United Kingdom wants to follow in the footsteps of the European Union

On the other hand, the European Union is reportedly working to publish a bill detailing the design and use cases of a digital euro. The bill will specify all potential applications of a digital euro and the supporting technology.

According to reports, the EU has developed new regulations for accurately evaluating the potential digital euro and other digital assets. In the meantime, the United Kingdom still intends to follow in the EU's footsteps by extending its existing regulations on cryptocurrencies and possibly creating additional regulations for the digital pound.

The Bank of England and the Treasury are reportedly advancing to the second phase of the digital pound initiative. At this level, the policy and technology model of the digital currency would be specified. In addition, the regulation would include cases of ownership and security, per Abbott.

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In addition, Abbott indicated that regulators would need to define the property status of token-based CBDC. He asked, by way of illustration, whether a CBDC holder could lend it to a commercial bank or deposit it into a bank account.

Additionally, the attorney emphasized that not all digital pound laws would be novel. However, he stated that certain scenarios lack precedent in the law database. Consequently, he proposed that all financial statutes be revised so that their applicability to the CBDC is made explicit.

Government Must Consider User Data Security

In their speech, the attorneys emphasized that the current anti-money laundering laws and payment regulations permit access to the digital pound wallet with minimal validation checks. This would safeguard user funds in the event that a company fails to make payment.

In February, during the digital pound debate, onlookers questioned how the regulators intend to protect the freedom and confidentiality of users. Andrew Griffith, the Economic Secretary of the United Kingdom, responded that the government must strike a balance between citizens' freedoms and their responsibility to protect them from fraud and scams.

In addition, he stated that they would decide when it is necessary to invade users' privacy with proper justification.

According to reports, British regulators wish to work with private companies to develop a digital pound wallet. In addition, the consultation emphasized that businesses that wish to use the digital pound must adhere to the data protection rules that require companies to use customers' information in an ethical manner.

According to the 2018 Data Protection Act of the United States, law enforcement officials are permitted to access the personal information of bank account holders. The consultation revealed that the same would occur to the issuers of digital sound wallets.

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However, the digital pound makes it easier to track users' financial information, unlike fiat currency. Before issuing its CBDC, the government must consider a number of factors, including the security of consumers' data, concluded the two attorneys.