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UK Treasury Committee launches inquiry on digital currencies

BBR Staff Writer Published 23 February 2018

The UK Parliament’s Treasury Committee has launched an investigation on digital currencies and distributed ledger technology.

The inquiry will involve examining the role of digital currencies in the country, including benefits and risks associated with digital currencies to the consumers, businesses and the government.

As part of the inquiry, the committee will assess the potential affect of distributed ledger technology such as blockchain on financial institutions, including the central bank, and financial infrastructure.

The committee will also inspect the regulatory response to digital currencies from the government, Financial Conduct Authority and the Bank of England.

In addition, the committee will assess the options to balance the regulation for providing adequate protection for consumers and businesses without suppressing innovation.

The Treasury Committee chair and MP Nicky Morgan 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.

“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 Treasury Committee member and MP Alison McGovern said: "This inquiry comes at the right time, as regulators and Governments wrestle with recent events in cryptocurrency markets. New technology offers the economy potential gains, but as recently demonstrated, it may also bring substantial risks.”

Digital currency is a type of currency available only in digital form and not in physical form such as banknotes and coins. It exhibits properties similar to physical currencies, but enables instantaneous transactions and borderless transfer-of-ownership.

Bitcoin, which is a cryptocurrency, is the first decentralized digital currency. Its transactions are verified by network nodes through the use of cryptography and recorded in a public distributed ledger called a blockchain.

Image: The Treasury Committee will examine the benefits and risks of digital currencies. Photo: courtesy of The UK Parliament.