On 22 February 2018 The House of Commons Treasury Committee (also referred to as the ‘Treasury Select Committee’ or ‘TSC’) launched an inquiry into the role of digital currencies and the technologies underpinning them.
The purpose of this inquiry is to increase understanding of digital currencies and distributed ledger technologies (such as blockchain) in order to provide an adequate regulatory response. The TSC is also going to be looking at the regulation and responses to date (in particular from the Government, the Financial Conduct Authority (FCA) and the Bank of England) and analysing the impact for consumers, businesses and the financial sector as a whole both in terms of risks and opportunities.
This inquiry has come about in the context of global interest in cryptocurrencies and concerns of concealing criminality due to lack of transparency and lack of protection for consumers and businesses. This inquiry follows the publication of the FCA’s responses to a consultation on distributed ledger technologies where it announced it would “gather further evidence and conduct a deeper examination” of the initial coin offering market to consider whether it should regulate beyond the current consumer warning that it has issued. Mark Carney, the Governor of the Bank of England and Chairman of the G20's Financial Stability Board, has in multiple addresses raised the need for more regulation.
The inquiry will aim to form a view as to the required level of regulation to ensure a balance between innovation and protection in this unregulated and fast-evolving field. The inquiry intends to cover in particular:
- The role of digital currencies as a replacement of traditional means of payment
- The disruptive impact on the public sector
- The risks for consumers, businesses and governments
- The current and future applications of distributed ledger technology in the financial services sector
- What type of regulation and responses may be beneficial or detrimental to innovation, consumer trust, start-ups
- Any lessons which could be learnt from overseas
The TSC has not set a timeline for this inquiry yet. Interested parties may already submit evidence to the committee.