U.K. Announces Inquiry into Crypto Space; Bitcoin Slides Below $10,000 on the News

The U.K. has launched an inquiry into the crypto space as its policymakers want to better understand it, and be careful to not to stifle beneficial innovations that can come from it.

U.K.’s Parliament Treasury Committee has launched an inquiry that will cover the impact of digital currencies in the country.

As the news spread, Bitcoin’s price slid, and was below $10,000 – a price high that it hadn’t seen in weeks.

In the U.K., like in many countries around the world, policymakers are eagerly trying to learn more about digital currencies. U.K. members don’t just want to find out more about the risks that cryptos may bring to consumers, businesses, and the government, but they also want to understand the opportunities the crypto space may bring.

Let’s go over what U.K. officials are seeking to learn about cryptos.

Learning more about everything crypto

The rapid pace of developments in the crypto space is hard to keep up with, especially for lawmakers who are continuously trying to get a handle on them to keep bad actors out.

The Treasury Committee is particularly interested in how to regulate the space without stifling innovation. Take this statement from its announcement, for example:

 “[The inquiry] will also scrutinise the regulatory response to digital currencies from the Government, the Financial Conduct Authority [FCA], and the Bank of England, and how regulation could be balanced to provide adequate protection for consumers and businesses without stifling innovation.”

The FCA last year warned consumers to be wary of the “extremely high-risk, speculative products.”

Nicky Morgan, the Treasury Committee’s chairperson is reported as saying:

“People are becoming increasingly aware of cryptocurrencies such as Bitcoin, but they may not be aware that they are currently unregulated in the U.K. Striking the right balance between regulating digital currencies to provide adequate protection for consumers and businesses, while not stifling innovation, is crucial.”

The U.K.’s mission concerning not wanting to stifle innovation is in line with other countries, including the United States.

Earlier this month, the chairs of the U.S. Securities and Exchange Commission and the U.S. Commodity Futures Trading Commission met before members of the Senate Banking, Housing and Urban Affairs Committee. On hand were Jay Clayton, chair of the SEC, and J. Christopher Giancarlo, chair of the CFTC.

Both Clayton and Giancarlo said they don’t want to stifle innovation, but at the same time, they want to make sure people aren’t being defrauded.

Questions about cryptos

In trying to better understand the crypto space, the Treasury Committee drafted several questions that its members deem “key.”

Here’s a sampling of them:

  • Are digital currencies ultimately capable of replacing traditional means of payment?
  • To what extent could digital currencies disrupt the economy and the workings of the public sector?
  • What risks and benefits could digital currencies generate for consumers, businesses and governments?
  • How is distributed ledger technology being applied in the financial services sector, and how might it be applied in future?
  • How might the Government’s processes adapt should digital currencies be adopted more widely (e.g. tax implications, anti-money laundering measures)?
  • Is the government striking the right balance between regulating digital currencies to provide adequate protection for consumers and businesses whilst not stifling innovation?
  • Could regulation benefit digital currency start-ups by improving consumer trust?
  • How are governments and regulators in other countries approaching digital currencies and what lessons can the UK learn from overseas?

U.K. officials also want to examine the potential impact of Blockchain on financial institutions, including the central bank, and financial infrastructure.

Bitcoiners triggered

As you know, most Bitcoin traders cringe at the thought of any regulation from government. As news of the U.K.’s inquiry launch pread, Bitcoin’s price slid. At the time of writing, (New York time) it had dipped below $10,000 to $9,773.

The price of Bitcoin, and other cryptos, had just begun to recover this week from dips that sent their prices to lows not seen since last year.

We expect to see more countries step up their efforts to learn about how to approach regulating the crypto space. In fact, many observers say regulatory moves could help ease the volatility that plagues the space.

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