UK regulatory authorities have started looking into the impact of digital assets on the country’s economy, with the view to regulating the crypto ecosystem in a way that will be advantageous to all stakeholders.
Regulation that Supports Innovation
According to Investment Week, the investigation will study the effect of virtual currencies and blockchain technology on financial institutions as well as other areas of the economy.
The inquiry will also carefully formulate guidelines that will protect businesses and consumers without “Stifling innovation.”
Nicky Morgan MP, chair of Treasury Committee said, “People are becoming increasingly aware of cryptocurrencies such as Bitcoin, but they may not be aware they are currently unregulated in the UK, and there is no protection for individual investors.”
She also noted that:
“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.”
Cryptocurrency is a Double-Edged Sword
MP Alison McGovern, a member of the Treasury committee, opined that the government needs more enlightenment on crypto because as bitcoin and other digital assets offer great gains to investors, there is also a substantial level of risk involved.
In her words:
“This inquiry comes at the right time, as regulators and governments wrestle with recent events in cryptocurrency markets. New technology offers the economy potential gains, but as recently demonstrated, it may also bring substantial risks. It’s time that Whitehall and Westminster understood cryptocurrency better and thought more clearly about the policy environment for blockchain technology.”
Regulation is Inevitable
While the chairperson of the Treasury committee and some members are on the same page concerning the fair regulation of the blockchain ecosystem, some other officials see cryptocurrency as a distraction that needs to be taken care of as fast as possible.
Regulation Counsel at law firm Ashurst Lorraine Johnston reiterated that the inquiry, “Signals yet another step towards the what-seems-like inevitable regulation of digital currencies,” adding that, “Yet again the conflicting interests of supporting innovation versus consumer protection are being put under scrutiny, this time by the Treasury. But surely this is a crypto-conundrum that no country has yet solved adequately? I wouldn’t, however, bet against some form of quasi-regulation of digital currencies coming out of this.”
Meanwhile, the CEO of BrokerNotes, a trading comparison site, Marcus Taylor, is of the opinion that the virtual currency market is a distraction:
“The cryptocurrency market is, quite frankly, a distraction. Until we move beyond viewing cryptocurrencies purely as a tradable asset, to understanding the different applications of the underlying technology and the potential to make cryptocurrencies a viable alternative to fiat currency, it’s going to be difficult to make any meaningful progress.”
He also stated, “The UK has a great opportunity to embrace blockchain technology and lead the way in building innovations that can help the UK economy. The is inevitable with or without government intervention. However, with the right level of regulation, funding and support the government can certainly make things happen faster.”
A fair regulation of the crypto market is a step in the right direction as trying to stifle the growth of the virtual currency ecosystem might be met with stiff resistance from the masses, just as it happened in South Korea, where the Justice Minister was petitioned for initiating a ban on virtual currencies.
Bitcoin and altcoins are slowly but steadily becoming a part of life especially for the younger generations and blockchain technology only make the crypto revolution a more achievable feat.