MPs are launching an inquiry into bitcoin and other cryptocurrencies in a bid to evaluate the benefits and risks of the technologywhile, Bitcoin is sitting at just under $10,500 (£7,559) after sliding dramatically from a high of almost $12,000 on Tuesday.
The Treasury Committee will investigate the impact of digital currencies on banks and consumers, as well as assessing “whether they could ultimately replace traditional money”, Bloomberg says.
The crypto-slump comes as Britain’s Treasury Select Committee of lawmakers on Thursday threatened the introduction of new laws to govern the notoriously wild and volatile virtual currency markets. It has launched a probe which will focus on the opportunities and risks posed to consumers, businesses and the government by the rising popularity of cryptocurrencies, the committee said.
A global investment craze over bitcoin and other cryptocurrencies in the last year has seen wild gyrations in their valuations, making fortunes for some investors, while costing others a fortune. Bitcoin, the best known virtual currency, lost over half its value earlier this year after surging more than 1,300 percent in 2017. This week, a mass sell-off drove down the value of Bitcoin and most rival cryptocurrencies including Ethereum, Ripple and Litecoin.
‘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 Nicky Morgan, chair of the Treasury Committee.
According to Reuters, the committee will “take written and verbal evidence from a range of experts on the digital currencies”. The inquiry will consider whether the government is striking the right balance between protecting customers and businesses without stifling innovation.
The 11 members of the committee will also “scrutinise how to police cryptocurrencies”, as the booming market currently has “little transparency or accountability”, the website says.
Theresa May said she was “very seriously” considering taking action against digital currencies.
“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,” Ms Morgan added.
Governments and regulators worldwide have in recent months shown themselves divided on what to do about cryptocurrencies, which have already spawned investment scams promising returns of over 1,000 percent and hacks on the exchanges that store the virtual funds.
South Korea recently introduced new regulation that bans people from trading bitcoin and other cryptocurrencies anonymously, in order to protect investors from scams.
The finance ministers and central bank governors of France and Germany earlier this month called for the policy and monetary implications of cryptocurrencies to be placed on the agenda of the upcoming G20 meeting of the largest advanced and developing economies.
The Governor of the Bank of England Mark Carney meanwhile on Monday said that Bitcoin has ‘pretty much failed’ as a currency measured by standard benchmarks, and is neither a store of value nor a useful way to buy things.
But the BoE is one of a number of central banks and governments around the world that are looking into the underlying blockchain technology as a potential way of issuing digital-only currency, for making settlement more efficient, or for distributing and tracking money in the public sector. Saudi Arabia’s central bank last week signed a deal with U.S. based digital currency firm Ripple to help banks in the kingdom settle payments using the technology.