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Markel Tax

22 Feb 2018

MPs start digital currency inquiry

The Treasury Committee has announced an inquiry into the role of digital currencies in the UK.

Nicky Morgan, chair of the committee, commented:

“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.
“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 cryptocurrencies 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.”

Some of the key questions the committee will consider in this inquiry include:
  • Are digital currencies ultimately capable of replacing traditional means of payment?
  • To what extent could digital currencies disrupt the economy and the workings of the public sector?
  • What risks and benefits could digital currencies generate for consumers, businesses and governments?
  • How is distributed ledger technology being applied in the financial services sector, and how might it be applied in future?
  • What work has the Government (and its associated bodies) done to understand, prepare for and, where relevant, encourage changes that may be brought about by increased adoption of digital currencies?
  • How might the Government’s processes adapt should digital currencies be adopted more widely (e.g. tax implications, anti-money laundering measures)?
  • Is the government striking the right balance between regulating digital currencies to provide adequate protection for consumers and businesses whilst not stifling innovation?
  • Could regulation benefit digital currency start-ups by improving consumer trust?
  • How are governments and regulators in other countries approaching digital currencies and what lessons can the UK learn from overseas?
As yet no date has been publicised as to when the first round of evidence will be heard.

Whilst Bitcoin is a virtual currency, blockchain is the technology which underpins it. Blockchain has multiple applications and has even been used for voting purposes in Columbia. Arguably the committee would be wise to understand blockchain first, before moving on to cryptocurrencies.

 
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