Examination of the advantage and benefits of cryptocurrencies and the possibility of what regulatory measures to be taken for the new technology is being considered by U.K. lawmakers as they launch an inquiry into multiple aspects of virtual currencies.
The Parliament’s Treasury Committee of U.K. said in a statement that estimations of whether the new form of digital currencies could potentially ultimately replace traditional currencies will be examined in addition to the what impact the likes of Bitcoin and other virtual currencies have on the traditional banking system and consumers. The U.K. government has been attempting to manage and regulate the cryptocurrency market place which is typically short of desired levels of transparency or accountability and it is in this context that the possibility of policing cryptocurrencies would be looked into by the 11-member committee.
“People are becoming increasingly aware of cryptocurrencies such as Bitcoin, but they may not be aware that they are currently unregulated in the U.K.,” said Nicky Morgan, a Conservative lawmaker and the committee’s chairwoman. “Striking the right balance between regulating digital currencies to provide adequate protection for consumers and businesses, while not stifling innovation, is crucial.”
The manner in which the financial institutions which include the Bank of England are affected by blockchain technology – the one that drives cryptocurrencies, would also be estimated by the lawmakers.
There is a global craze about virtual currencies, the degree of which has been identified by economists to be similar to that during the dotcom bubble of the 1990s and the 17th-century Dutch tulip craze and regulators globally are trying to ascertain the factors ad reasons for this trend. According to the CoinMarketCap.com website, in just the last 12 months, there has been an overall increase of 2000 per cent in the total value that is accorded to all o f the 1,515 cryptocurrencies that are in circulation globally.
Regulation of cryptocurrencies is however already being done by some countries. For example, China has prevented any new sale of digital tokens, while Japan has made it mandatory or crypto exchanges to get themselves register with the regulators and to regularly file their latest financial reports. And regular warnings related to initial coin offerings are being issued by the Securities and Exchange Commission in the U.S. and has signaled that there would potentially be stringent regulations very soon to regulate the cryptocurrency market.
However, a more cautious approach has been adopted by the U.K. Consumer were warned about the “extremely high-risk, speculative products” by the Financial Conduct Authority of the U.K. in November.
(Adapted from Bloomberg.com)