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UK launches an inquiry into cryptocurrencies

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After the unprecedented surge in the valuation of bitcoin reaching $20,000 towards the end of last year, there has been a spike in interest, discussion and awareness regarding cryptocurrencies in general. The Treasury Committee inquiry is just another add-on to this piqued interest.

The inquiry will be looking into the possible repercussions of cryptocurrencies on the new age businesses, consumers, government. It is also interested to look into the impact of the distributed ledger system, aka, the block chain technology on financial institutions, banks and day-to-day financial transactions.

Cryptocurrencies have attracted a lot of negative sentiments as they have become the default payment method for traders in underground forums and dark web. Also, ransomware payments are demanded in digital currencies. This can mainly be attributed to the absence of any regulation around cryptocurrencies in the UK.

The inquiry would be exploring ways to regulate these digital currencies, to prevent illicit users misusing it to gain additional layers of anonymity, and at the same time, make sure it does not stifle innovation.

“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,” said the Chair of Treasury Committee.

The main aspects or questions that the committee wishes to explore are:

  1. Can digital currencies replace traditional means of payment entirely?
  2. How disruptive can this be to the operation of the public sector and businesses?
  3. What are the possible applications of the distributed ledger system in the financial sector?

“It is time that Whitehall and Westminster understood cryptocurrency better, and thought more clearly about the policy environment for blockchain technology,” said a MP, who also is a part of the Treasury Committee.

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