The Treasury Select Committee has launched a new inquiry into digital currencies and distributed ledger technology, exploring the opportunities and risks of cryptocurrencies in the UK.

The committee will examine the regulatory response to digital currencies from the government, the Financial Conduct Authority, the Bank of England, and how regulation could be balanced to provide adequate protection for consumers and businesses without stifling innovation.

Nick Morgan MP, chair of the Treasury Committee, commented: “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 distributed ledger technology that supports digital currencies is said to have significant transformative potential, not least within the financial services sector. 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.”

Alison McGovern MP, member of the Treasury Committee, added: “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.”

A spokesperson for CryptoUK, the new self-regulatory cryptocurrency trade association, added: “We welcome the decision by the Treasury Select Committee to launch this inquiry and look forward to contributing. As some of the leading businesses in the cryptocurrency industry we believe that under the right regulatory framework, there is an opportunity for the UK to become a global leader in this exciting technology.”

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