The first step of a potential crackdown on cryptocurrencies is underway in the UK. Investigators are said to be taking a good look at Bitcoin and its underlying technology, as a means of measuring cryptocurrency’s overall risk to central banking and traditional financial institutions, while also assessing whether or not regulatory measures are necessary.
Is Regulation Impending?
The UK appears to be setting the stage for cryptocurrency regulation.
According to The Telegraph, The House of Commons Treasury Committee is conducting an investigation into both cryptocurrency and the blockchain, sparking fears of regulation in the future.
Committee chair Nicky Morgan claims that the investigation will primarily evaluate “the potential risks that digital currencies could generate for consumers, businesses, and governments, including those relating to volatility, money laundering, and cyber-crime,” in addition “to what extent they could disrupt the economy and replace traditional means of payment.”
More worrisome for fans of the unregulated market, however, is the fact that the committee is also set to assess whether or not the government and prominent financial institutions – such as the Bank of England and the Financial Conduct Authority – should impose regulations on cryptocurrencies.
Plenty of Positive Spin
Of course, prominent figures from the world of traditional finance are more than happy to put a positive spin on cryptocurrency regulation. As reported by The Telegraph, Odysseas Sclavounis – a Bitcoin expert from the Alan Turing Institute – claims:
A good regulatory framework is always welcome and this will provide clarity on tax as well as consumer protection.
Others, like the former head of GCHQ Robert Hannigan, have taken the opportunity to not only praise regulation but bash Bitcoin. Hannigan states:
Cryptocurrencies have a bright future but Bitcoin has got them a bad name. We shouldn’t let Bitcoin put us off. So far, ordinary people have not been hurt by this and the economic effects have been minimal, which is why regulators have sensibly held back. But as more people invest it’s important that Treasury looks more closely – other governments have already started to do so.
Meanwhile, economic sociologist and Oxford University professor Villi Lehdonvirta believes that both developers and investors would welcome regulation in the UK, stating:
Many cryptocurrency developers and investors would be pleased about the Treasury looking into regulating the space, because the right regulation could help integrate their solutions to the mainstream financial system.
The UK Managing Director at eToro interestingly agrees. Said Iqbal Gandham:
We would support such investigation, because appropriate regulation of cryptocurrencies could help ensure consumer safety, the promotion of best practice, and provide certainty and clarity for cryptocurrency financial service providers.
With all 0f that positive spin from The Telegraph, a politically conservative newspaper, we’re almost tempted ourselves to call regulation from The Bank of England – who recently claimed Bitcoin has failed on virtually all fronts – and British government a good thing.
Those opposed to regulation, however, might argue that traditional financial institutions simply feel threatened by the cryptocurrency space, and are interested in stifling unregulated innovation while incorporating their own in-house blockchain technology.
How do you feel about regulation from governments, central banks, and other financial institutions? Do you think cryptocurrency regulation benefits investors, traders, businesses and/or consumers? Let us know in the comments below!
Images courtesy of AdobeStock, Wikipedia Commons, eToro