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February 22, 2018

Bitcoin inquiry launched over cybercrime fears

Treasury raises concerns over crypto-currencies as an inquiry is scheduled to evaluate the positives and negatives.

By April Slattery

An inquiry will be held by the Treasury Committee to evaluate whether Bitcoin and other digital currencies bring more joy than woes to the UK economy.

The committee has said the inquiry will evaluate all the potential risks and opportunities the digital currencies can bring to residents, businesses and the UK Government. Both digital currencies and blockchain technology will be examined; to look at the potential impact such technology can have on financial institutions and infrastructures.

MPs have initiated the inquiry after the number of people becoming interested and investing in them has increased significantly. The rise and fall of Bitcoin last year brought the focus on cryptocurrencies, which now are available in different forms such as Ripple and Litecoin. Concerns have risen as the currencies were deemed a scam and risky for businesses.

Nicky Morgan, Chair of The Committee, explained the intentions of the inquiry were to better protect the UK amid the rise of the currencies.

“People are becoming increasingly aware of crypto currencies 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,” Morgan said. “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. We will also examine the potential benefits of crypto currencies 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.”

Bitcoin inquiry launched over cybercrime fears

The inquiry will look into all types of cryptocurrencies and blockchain.

There will be an evidence session will allow MPs to bring forward concerns and evaluate the technology correctly, before making an infinite decision about its future in the UK. The evidence session will look at key questions including digital currencies’ ability to replace existing payment methods, risk and benefits to the UK and whether it could disrupt the economy and work of the public sector.

The committee will also evaluate the use of digital currencies in overseas countries and distinguish how it has impacted them; looking at the potential it could bring the UK.

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Morgan said: “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.”

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Bitcoin and other crypto currencies have risen significantly in value, attracting millions to buy the currency despite its rollercoaster ride in valuation. On Wednesday Bitcoin was trading at around $10,600, down from its high of almost $20,000 in December. Experts have constantly warned investors that the currency could collapse, leaving them with nothing.

This perspective on the currency has brought other MPs of the Committee to welcome the inquiry. Alison McGovern MP, Member of the Treasury Committee, 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 as demonstrated it may also bring substantial risks.

“It is time that Whitehall and Westminster understood cryptocurrency better, and thought more clearly about the policy environment for blockchain technology.”

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