The Treasury Committee has launched an inquiry into unregulated digital currencies and distributed ledger technology.
As the cryptocurrency market continues to gain momentum in global markets, there have been questions over how they will be regulated to avoid substantial risks.
The committee will look into the role of digital currencies in the UK, including the opportunities and risks that digital currencies may bring to consumers, businesses, and the government.
The Treasury Committee will examine the potential impact of distributed ledger technology, such as blockchain, on financial institutions, including the central bank, and financial infrastructure.
It will also scrutinise the regulatory response to digital currencies from the Government, the Financial Conduct Authority, and the Bank of England, and how regulation could be balanced to provide ‘adequate protection for consumers and businesses without stifling innovation’.
Nicky Morgan MP, chair of the Treasury Committee, said: “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 cyber-crime.
“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.”
Earlier this month, seven cryptocurrency companies formed a UK cryptocurrency trade body, bringing the first self-regulation to the industry. CryptoUK will look to promote the development and recognition of digital currency technologies in the UK. The trade association said it will also educate politicians and regulators about the industry, whilst also working with them to develop an appropriate operating framework for the UK. The trade body CryptoUK was formed by BlockEx; CEX.IO; Coinbase; CoinShares; CommerceBlock; CryptoCompare; and eToro.
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