Legislation could be introduced to regulate cryptocurrencies in the UK
The Treasury Committee has confirmed that it has started investigating the impact of cryptocurrencies in the United Kingdom, with a view to regulating the asset class in the not-too-distant future.
Bitcoin has become a household name – scaring Members of Parliament, some of whom claim that the increasing adoption of digital currencies will lead to more people committing cybercrime and tax evasion. That’s resulted in the Treasury Committee sparking a thorough investigation into the impact of cryptocurrencies.
To be clear, the Committee doesn’t want to stifle innovation. It’s aiming to use its findings to strike the right balance between regulating digital currencies to provide adequate protection for businesses and consumers alike, according to Treasury Committee chair – and former Secretary of State for Education – Nicky Morgan.
In addition to assessing the restrictions China and South Korea enforced to regulate the trade of virtual currencies, the Committee is also evaluating the risk that cryptocurrencies pose to banks, government and the general public, focusing on how the untraceable asset class has led to a significant rise in cybercrime.
The main issue with virtual currencies is that they’re being misused. Some are treating them as a stock, selling their tokens when there’s a spike, causing the value to topple. Others are using them for illicitc purposes. Both of those use cases miss the mark, however. Virtual currencies are a currency, indented to be spent.
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It’s not until they’re regulated that we’ll have a chance of walking into our local supermarket and purchasing a loaf of bread using Bitcoin, for example. The problem at the moment – for merchants, at least – is that virtual currencies far too volatile. A token can be valued at $10,000 on Tuesday and $1,000 on Wednesday.
“Given the volatility of Bitcoin right now, it’s not a reliable currency for transactions because if you’re a merchant and you have a ten percent profit margin, and you accept Bitcoin, and the very next day bitcoin drops fifteen percent, you are now underwater on that transaction,” said PayPal’s Chief Financial Officer John Rainey.
The Committee doesn’t want to ban cryptocurrencies. It wants to see how it can make them safer for businesses and consumers. And that’s something most of the public should be able to stand behind. Those using virtual currencies for illegitimate purposes, on the other hand, will likely be adverse to the plan.
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