The Treasury Committee has announced an inquiry will take place into the role of crypto in the UK that will explore both the risks and opportunities for consumers and businesses.
The statement from the committee included a request for the submission of written evidence examining whether cryptocurrencies are likely to replace traditional finances.
MPs will also be looking into the regulation of cryptoassets to decide the best way to balance consumer protection and innovation.
The UK has been comparatively slow in regulating crypto, with some suggesting the nation will fall behind as other bodies, such as the EU, implement regulations.
MPs will be looking into existing regulations of cryptoassets present elsewhere to see if the UK can learn lessons from them.
The inquiry will try to determine if regulation could benefit UK crypto startups by boosting consumer confidence and limiting risks. It will also look into the possibility of implementing digital assets into British financial institutions, such as the Bank of England.
Cryptoasset hub plan on hold?
The former chancellor, Rishi Sunak, previously announced the Treasury’s plan to transform the UK into a “global cryptoasset hub”.
This plan was outlined in April, however, given the current political uncertainty surrounding the leadership of the Conservative Party, this and other plans may be on hold for some time.
“Cryptoassets have the potential to bring new and innovative changes to the UK financial system, the economy and broader society,” said MP Mel Stride, chair of the Treasury Committee.
“However, there are also significant concerns around their use to launder funds, purchase illegal products, and evade international sanctions.”
Stride pointed to the crypto crash, which saw the value of the global cryptocurrency market drop by billions as an area of concern.
“In recent months, the value of most cryptoassets has fallen dramatically. As a committee, we will be investigating the opportunities and risks that crypto presents, where additional regulation may be required, and the lessons the government can learn from other countries,” Stride said.