HM Treasury faces questions about possible Bitcoin failure
The Bank of England continues to monitor developments and the independent Financial Policy Committee aims to ensure the UK financial system is resilient to the wide range of risks it could face, says Stephen Barclay.
Growing concerns that the cryptocurrency market is a bubble that may burst have prompted questions about the UK economic stability in case Bitcoin and its likes fail. HM Treasury had to respond to enquiries about such a scenario.
Eddie Hughes, a Conservative MP of the House of Commons, has addressed Mr Chancellor of the Exchequer, asking “what assessment his Department has been made of the risks to the UK economy of the potential failure of Bitcoin and other crypto-currencies”.
Stephen Barclay, of the Conservatives, replied on Tuesday:
“The independent Financial Policy Committee (FPC), established by the Government, aims to ensure the UK financial system is resilient to, and prepared for, the wide range of risks it could face — so that the system could support the real economy, even in difficult conditions.
The Bank of England continues to monitor developments, and provided its latest assessment of the risks to financial stability in the Financial Stability Report, published in November 2017.
In addition, the Financial Conduct Authority (FCA) has stated that it will continue to monitor distributed ledger technology (DLT)-related market developments, working collaboratively with industry, HM Treasury, the Bank of England, the Information Commissioner’s Office, and other UK bodies to ensure a coordinated approach towards DLT in the UK.”
Mr Barclay added that the UK government has not made any formal assessment of the value to the UK of Bitcoin or other cryptocurrencies.
He noted that the government is currently negotiating amendments to the European Anti-Money Laundering Directive which will extend regulation to virtual currency exchange platforms and custodian wallet providers. These amendments will enable competent authorities to ensure these firms are mitigating the risks regarding money laundering and terrorist financing, and enable the legitimate sector to grow.
These negotiations are expected to conclude at EU level by early 2018, with a year for Member States to then implement the Directive.