Hot on the heels of Bitcoin’s dramatic rise and fall - and rise, British parliamentarians have decided to launch an inquiry into digital currencies.
The Treasury Committee, one of the more influential of the House of Commons’ talking shops, today confirmed it will investigate the impact of cryptocurrencies and how they can be regulated.
“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,” said committee chair Nicky Morgan.
“Striking the right balance between regulating digital currencies to provide adequate protection for consumers and businesses, whilst not stifling innovation, is crucial.”
As well as looking at possible regulatory regimes - including what other countries are doing - the committee wants to assess the risks cryptocurrencies pose to governments, banks and the public, such as money laundering or cyber-crime.
The inquiry comes as Bitcoin hit a three-week high on Tuesday, reaching $11,900 for one Bitcoin, more than recovering from the low at the start of this month of slightly below $7,000 - although still not hitting last year's heady $20,000 heights. Reuters linked the recovery to South Korea's decision to relax its previously strict regulatory stance.
But other countries continue to treat the technology with extreme caution, as they try to get to grips with regulation and warn the public of the dangers of investing in anything that says blockchain in the name, with some banks going so far as to ban Bitcoin purchases by their cards.
Many regulators and government bodies - from the European Commission to the US Securities and Exchange Commission - have made no secret of their disdain for Bitcoin.
And Mark Carney, governor of the Bank of England, this week said Bitcoin had “pretty much failed” as a currency when compared against standard benchmarks.
But the committee also plans to investigate the potential benefits of cryptocurrencies and the underlying distributed ledger technology, for instance in boosting security or disrupting the economy or work of the public sector.
The committee said it would announce witnesses in due course, but will first be accepting written evidence on the inquiry topics.®