What has happened?
The UK Parliament has launched an inquiry into digital currencies and distributed ledger technology.
What does this mean?
Launched by the Treasury Committee, the inquiry will cover the role of digital currencies in the UK, including the opportunities and risks that digital currencies may bring to consumers, businesses and the government.
The potential impact of distributed ledger technology on financial institutions and financial infrastructure will also be under the spotlight.
The committee will also scrutinise the regulatory response to digital currencies from the government, the Financial Conduct Authority and the Bank of England, and how regulation could be balanced to protect consumers and businesses without stifling innovation.
In an announcement, Nicky Morgan MP, who is the Chair of the Treasury Committee, said that although people are increasingly aware of cryptocurrencies, many ignore that they are unregulated in the UK and that investors are therefore not protected.
She said that the 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."
According to Alison McGovern MP, who is a member of the committee, 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," she warned.
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