Boon for bitcoin: British government is set to regulate digital currency exchanges
The British government is set to regulate bitcoin exchanges it announced in a report published alongside George Osborne's annual budget.
The Treasury said the new regulation would support innovation and prevent criminal use of digital currencies. The proposals will be consulted on early in the next parliament.
The government will work with the British Standards Association (BSI) to develop a set of standards that will protect consumers, it said.
The Treasury also announced a new research initiative on digital currency technology, and said it would inject an additional 10 million pounds ($14.66 million) into the area.
"Today's announcement is significant in that it brings bitcoin and other block chain technologies closer to mainstream adoption," said Tom Robinson, a board member of the UK Digital Currency Association, which has been involved in the Treasury's consultation process.
Garrick Hileman, economic historian at the London School of Economics, told the Financial Times: "The £10m in funding for digital currency research demonstrates that this government is serious about making the UK an attractive destination for cryptocurrency entrepreneurs and investment. No other government has made such a positive overture to Bitcoin.”
In the discussion paper published in February, the Bank of England said that digital currencies such as bitcoin showed "considerable promise" and that they showed it was possible to transfer value securely without a trusted third party.
The bank also raised the question of whether central banks should themselves issue digital currencies.
The Government's Office for Science has also published FinTech Futures: The UK as a World Leader in Financial Technologies (PDF). It says "Digital currencies such as bitcoin have the potential to replace traditional currency and, by extension, the need for central banking and regulatory systems."
It describes bitcoin as "an internet-scale open platform for value exchange with near-instant, near-free international value transfer requiring no central clearing. "
Belfast Telegraph Digital