Blockchain and bitcoin in the spotlight as government launches digital currencies inquiry

'It is time that Whitehall and Westminster understood cryptocurrency better,' says Treasury Committee on launch of inquiry - which aims to examine how to prevent bitcoin-related crime.
Written by Danny Palmer, Senior Writer

The potential benefits and risks of cryptocurrency and blockchain technology are to be examined by MPs in the UK's House of Commons.

SEE: What is blockchain? Understanding the technology and the revolution (free PDF)

The Treasury Committee inquiry follows a spike in interest and awareness around cryptocurrency, particularly after the sharp rise in the valuation of bitcoin, which reached almost $20,000 towards the end of last year.

The inquiry will examine the opportunities and risks that digital currencies could provide consumers, businesses and the government, as well as the impact of distributed ledger technology on financial institutions and banks.

Currently, there's no regulation around cryptocurrency in the UK, and indeed, cryptocurrency has become the default trading currency for those buying and selling on underground forums, while those dealing in ransomware demand payments in digital currencies.

The inquiry will examine how regulation could prevent money-laundering and other criminal activity using cryptocurrency - which provides illicit users with the benefit of additional layers of anonymity - without "stifling innovation".

"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," said Nicky Morgan MP, Chair of the Treasury Committee.

See also: Executive's guide to implementing blockchain technology

"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," she added.

Questions the Treasury committee will investigate 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?' and 'how is distributed ledger technology being applied in the financial services sector, and how might it be applied in future?'

The inquiry will also examine how the government, the Finanical Conduct Authority and the Bank of England have begun a regulatory response to digital currencies as they gain an increasingly high profile.

"It is time that Whitehall and Westminster understood cryptocurrency better, and thought more clearly about the policy environment for blockchain technology," said Alison McGovern MP, Member of the Treasury Committee.

The Treasury Committee is accepting written submissions in order to assist with the inquiry into cryptocurrencies and distributed ledger technology.


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