The U.K. Treasury has announced today that it will launch an inquiry into digital currencies and the technology behind it.
According to an announcement, the Treasury Committee wants to determine ‘the risks and benefits’ involved in them to businesses, consumers, and the government in the U.K. The inquiry will examine the potential impact that the blockchain may have on financial establishments such as the central bank. It will also determine the regulatory response from the U.K.’s Financial Conduct Authority (FCA), the Bank of England, and the government. It will look at how regulation can provide consumer protection without stifling innovation.
Nicky Morgan, Member of Parliament (MP), and Chair of the Treasury Committee, said in the announcement that even though people are becoming increasingly aware of cryptocurrencies, they may not realise that they are unregulated in the U.K., adding:
“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.”
According to Alison McGovern MP, and Member of the Treasury Committee, this ‘inquiry comes at the right time.’
“It is time that Whitehall and Westminster understood cryptocurrency better, and thought more clearly about the policy environment for blockchain technology,” she added.
The announcement of the Treasury’s plans comes at a time when Mark Carney, the Governor of the Bank of England, claimed that bitcoin had ‘failed’ as a currency. Earlier this week, he said to students at London’s Regent’s University that:
“It 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.”
He did add, however, that the blockchain may prove useful in verifying financial transactions in a decentralised way.
Notably, Theresa May, the U.K.’s Prime Minister, said at the World Economic Forum in Davos, Switzerland that cryptocurrencies such as bitcoin called for regulation to prevent their use in criminal activities.
At the time, she said:
“We should be looking at these very seriously precisely because of the way they can be used, particularly by criminals. It’s something that has been… increasingly developing. I think it’s something that we do need to look at.”