Treasury committee launches cryptocurrency inquiry

The Treasury committee has launched an inquiry into cryptocurrencies and distributed ledgers such as blockchain amid continuing debate about the dangers and opportunities presented by the technologies.

MPs on the cross-party committee will examine what the popularity of Bitcoin and other digital currencies means for consumers, businesses and government. They will examine how regulators have responded to the rise of cryptocurrencies in relation to money laundering, consumer protection and encouraging innovation.

The committee will also look at distributed ledgers which are used to record transactions securely and digitally. Cryptocurrencies use the ledgers but they can also be used for other transactions, prompting banks and central banks to explore their potential for making transactions safer and encourage innovation.

Bitcoin’s value has surged in the past year while remaining volatile as individual investors have bought the currency in what some experts have described as a speculative bubble. Charlie Munger, Warren Buffett’s business partner, has described Bitcoin as noxious poison. The Bank of England has said cryptocurrencies are not big enough to threaten the economy but warned individual investors to think carefully before investing.

Nicky Morgan, who chairs the committee, said: “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.”