UK Government Reviews Digital Currencies

The UK government has launched a ‘call for information’ on the benefits and risks of digital currencies, as part of moves to support the growth of the British financial technology sector.

The government is calling for views from a wide range of sources including the public, fintech firms, the financial services industry, regulators and law enforcement agencies on the potential digital currencies have for delivering new ways for customers to make payments and for encouraging innovation in the financial sector.

While the government recognises the potential of digital currencies, it also asking for views on the potential risks posed by digital currencies, including possible risks to customers and financial stability.

The regulatory element will form a key plank of the government’s planning.

“What kind of regulation would be appropriate?,” asks HM Treasury. “For example, should regulation be aimed at making digital currencies safer for users? Should regulation target illicit or illegal uses of digital currencies? Or would regulation prove overly burdensome for this new and growing industry?”

The UK’s chief regulator, the Financial Conduct Authority (FCA), last week announced that it will investigate ways in which the technology underpinning bitcoin can be used elsewhere in the formal financial services industry.

Economic secretary to the Treasury, Andrea Leadsom said: “A key part of our long term economic plan is to cement Britain’s position as the centre of global finance. So it is right that we are properly consider the potential benefits, as well as the risks, that digital currencies could bring to Britain’s economy, businesses and customers.”

Interested parties are invited to submit their views by 3 December.

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