UK MP's have stated that they aim to "find the right balance between providing adequate protection for customers, whilst not damaging innovation."
An inquiry conducted by the Treasury Committee may well be launched soon, to cover the grey area of cryptocurrencies; regulation. With prices of popular digital currencies, such as Bitcoin, seeing a surge towards the end of last year, the UK believes it would be suitable to provide safeguarding measures for consumers and businesses, to prevent fraudulent activities.
Currently, bodies such as the Financial Conduct Authority oversee financial transactions in the UK however, cryptocurrencies remain unregulated. With the great deal of interest and the potential rapid development of these currencies, it would be a lot safer to protect this without affecting other areas of the financial market.
(The rise of Bitcoin last year, as the currency saw a near-2,000 percent increase in value)
The Treasury Committee will weigh up the pros and cons before making a decision. Although there may be potential risks to the economy, regulation may also provide beneficial consequences, such as market stability, which would allow a steady rate of growth and development, coupled with the possible result that digital currencies could soon replace fiat money.
The Committee will also learn from how other global parties and regulators have handled cryptocurrencies. It is also believed that the technology that provides the foundation for cryptocurrencies, known as Blockchain, will also be under examination as it may provide the potential for negative implementations due to how open the platform is.
South Korea have taken drastic action against cryptocurrencies in general, through banning trading. This was to prevent any scams. Theresa May has also stated that she is "very seriously" considering taking action against digital currencies.
Bank of England Governor, Mark Carney, had stated that "Bitcoin had failed" as a currency in general. He added that it is "all over the map" and "nobody uses it as a medium of exchange."
With the future of cryptocurrencies still unclear, it is certain that the technology underlying them has the potential to develop into something revolutionary. If digital currencies were to be regulated, this may result in a period of price stability, instilling a lot more confidence in investors however, it may also prove to affect the rate of innovation within the Blockchain community, which has already proved that the potential for a revolutionary technology, not only in the Financial industry, is now on the horizon.
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