Chancellor George Osborne has announced a new initiative that will explore the potential role of cryptocurrencies in Britain’s economy.
Osborne has commissioned the Treasury to produce a programme of work on cryptocurrencies, examining their potential risks and benefits. The results, due to be published in the Autumn, could pave the way toward a new regulatory framework for cryptocurrencies in Britain.
“These alternative payment systems are popular as they are quick, cheap and convenient [...] I want to see if we can make more use of them for the benefit of the UK economy,” he said during his speech at the launch of Innovate Finance, formerly FinTech UK, a group that promotes the interests of the UK FinTech industry.
Backed by the City of London Corporation and Canary Wharf Group, the trade organisation aims to be a hub for industry influencers, regulators, tech and talent.
Cementing Britain’s leading role in finance
Speaking at the London conference, Osborne outlined a series of proposals that aim to foster financial innovation and establish the UK as a market leader in the FinTech sector.
He said the key to the government’s long term economic plan is “cementing Britain’s position as the centre of global finance”.
Osborne explained:
“It’s only by harnessing innovations in finance, alongside our existing world class knowledge and skills in financial services, that we’ll ensure Britain’s financial sector continues to meet the diverse needs of businesses and consumers, here and around the globe, and create the jobs and growth we all want to see in the future.”
However, he was also keen to recognise the potential risks involved with new technologies like bitcoin: “Among other things, [the programme] will look at whether regulation of the sector is required, so that virtual currency businesses can continue to be set up in the UK, and people and businesses can use [cryptocurrencies] safely.”
The government’s current position on cryptocurrencies has been somewhat ambiguous, although the UK has managed to attract a number of bitcoin businesses. Besides HMRC’s tax guidance, there has been little in the way of a comprehensive regulatory initiative.
Osborne also attended a demonstration of a Robocoin ATM operated by Cointrader.net and purchased an undisclosed amount of bitcoin.
Chancellor Osborne makes a withdrawal from a #bitcoin ATM pic.twitter.com/ZOERPCdmHm
— Innovate Finance (@InnFin) August 6, 2014
According to spectators, the Chancellor greeted the demonstration with great enthusiasm. Hugh Halford-Thompson, head of UK operations at Cointrader.net, described the purchase as a “great step” towards bitcoin’s political and regulatory acceptance.
A British BitLicense?
London is one of the biggest financial hubs in the world and is, by far, the biggest financial centre in Europe.
In June, the UK’s Financial Conduct Authority (FCA) announced a similar project dubbed Project Innovate to ensure “positive developments” like bitcoin are supported in the region. A representative from the FCA said the regulatory agency has yet to determine its stance on digital currencies.
Should Britain choose to follow in the footsteps of New York State, it would open up new possibilities for bitcoin businesses in Europe and across the globe. For the time being other jurisdictions in Europe have not expressed an interest in regulating cryptocurrencies, at least not in a similar fashion as the NYDFS.
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