Bitcoin latest: MPs to consider cryptocurrency regulation as part of new inquiry

The Treasury Committee wants to find a way to 'provide adequate protection for consumers and businesses, whilst not stifling innovation'

Aatif Sulleyman
Thursday 22 February 2018 13:34
What is Bitcoin and why is its price so high?

The Treasury Committee is launching an inquiry into digital currencies, which are attracting a great deal of interest after the spectacular rise of bitcoin last year.

It will assess the potential risks and benefits bitcoin and alternative cryptocurrencies could bring to individuals, businesses and the Government.

It will also consider the impact regulation could have, and whether or not it could protect people and organisations without stifling innovation.

Ms Morgan said: “[People] may not be aware that [cryptocurrencies] are currently unregulated in the UK, and that there is no protection for individual investors,” said Nicky Morgan, the Chair of the committee.

The Treasury Committee says it will study the ways in which overseas governments and regulators have approached digital currencies, and learn from them.

South Korea recently introduced new regulation that bans people from trading bitcoin and other cryptocurrencies anonymously, in order to protect investors from scams.

Shortly after, Theresa May said she was “very seriously” considering taking action against digital currencies.

“Striking the right balance between regulating digital currencies to provide adequate protection for consumers and businesses, whilst not stifling innovation, is crucial. As part of the inquiry, we will explore how this can be achieved,” Ms Morgan added.

The committee will also examine the potential impact of the underlying distributed ledger technology behind digital currencies, such as blockchain.

“The Treasury Committee will look at the potential risks that digital currencies could generate for consumers, businesses, and governments, including those relating to volatility, money laundering, and cyber-crime,” Ms Morgan continued.

“We will also examine the potential benefits of cryptocurrencies and the technology underpinning them, how they can create innovative opportunities, and to what extent they could disrupt the economy and replace traditional means of payment.”

Numerous financial experts have warned against investing in bitcoin, believing it to be a bubble that could collapse at any moment.

Earlier this week, Bank of England Governor Mark Carney said bitcoin “has pretty much failed thus far on ... the traditional aspects of money. It is not a store of value because it is all over the map. Nobody uses it as a medium of exchange.”

However, he added that its underlying technology may still prove useful as a way to verify financial transactions in a decentralised way.

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