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MPs to hold bitcoin enquiry

MPs to hold bitcoin enquiry

The UK parliament’s Treasury Committee has announced that it will launch an inquiry into digital currencies and blockchain technology.

The inquiry will cover the role crypto currencies such as bitcoin and ethereum play in the UK economy.

It will also examine the potential impact of distributed ledger technology (DLT), such as blockchain, on financial institutions.  

Chair of the Treasury Committee Nicky Morgan (pictured) said: '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.

'People are becoming increasingly aware of cryptocurrencies such as Bitcoin, but they may not be aware that they are currently unregulated in the UK, and that there is no protection for individual investors.

'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 cybercrime.

'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.'

The inquiry follows the publication of the Financial Conduct Authority’s (FCA) consultation paper on DTL in December 20117.

The FCA also recently warned that many new coin issues were essentially fraudulent, describing them as 'high-risk, speculative investments'.

Key questions the Committee will consider include:
  • Are digital currencies ultimately capable of replacing traditional means of payment?
  • To what extent could digital currencies disrupt the economy and the workings of the public sector?
  • What risks and benefits could digital currencies generate for consumers, businesses and governments?
  • How is distributed ledger technology being applied in the financial services sector, and how might it be applied in future?
  • What work has the Government (and its associated bodies) done to understand, prepare for and, where relevant, encourage changes that may be brought about by increased adoption of digital currencies?
  • How might the Government’s processes adapt should digital currencies be adopted more widely (e.g. tax implications, anti-money laundering measures)?
  • Is the government striking the right balance between regulating digital currencies to provide adequate protection for consumers and businesses whilst not stifling innovation?
  • Could regulation benefit digital currency start-ups by improving consumer trust?
  • How are governments and regulators in other countries approaching digital currencies and what lessons can the UK learn from overseas?

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