U.K. lawmakers are launching an inquiry into cryptocurrencies to investigate their benefits and risks and consider how the new technology should be regulated.
Parliament’s Treasury Committee will examine the impact of Bitcoin and its peers on banks and consumers and consider whether they could ultimately replace traditional money, it said in a statement on Thursday. The 11-member committee will scrutinize how to police cryptocurrencies as the government tries to get to grips with a marketplace with little transparency or accountability.
“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.,” said Nicky Morgan, a Conservative lawmaker and the committee’s chairwoman. “Striking the right balance between regulating digital currencies to provide adequate protection for consumers and businesses, while not stifling innovation, is crucial.”
Lawmakers will also look at how blockchain, the technology powering Bitcoin, affects financial institutions including the Bank of England.
The inquiry comes as authorities around the world struggle to understand a mania that’s been likened to the dotcom bubble of the 1990s and the 17th-century Dutch tulip craze. The total value of 1,515 cryptocurrencies in the global market has jumped more than 2,000 percent in the last 12 months, according to the CoinMarketCap.com website.
Other countries have been quicker to regulate cryptocurrencies. China has banned the sale of new digital tokens, while Japan has required crypto exchanges to register with the government and to file financial reports. In the U.S., the Securities and Exchange Commission has been sounding the alarm about initial coin offerings for months in a sign that tough rules may be on the way.
The U.K. has so far taken a more watchful approach. In November, the Financial Conduct Authority warned consumers to be wary of the “extremely high-risk, speculative products.”
Parliament’s inquiry launches Thursday, with the date of the first evidence session yet to be announced.