UK Call for Information on Digital Currencies

Just a short post today as I’m preparing for a Bitcoin talk tomorrow at the Scotland and the Future of the Web conference.

A few days ago, HM Treasury put out a Call for Information on Digital Currencies. It’s interesting to note the reasons behind their request. It would be great to get as much input to them as possible on this if you’ve got an interest in crypto-currencies in general. The deadline for submissions is 3rd December. The UK Digital Currency Association are doing a great job of coordinating responses (if you haven’t joined already, you should – it’s free).

I thought that there would be some merit in just listing the questions here for those who can’t be bothered clicking through.

Question 1

What are the benefits of digital currencies? How significant are these benefits? How do these benefits fall to different groups e.g. consumers, businesses, government, the wider economy? How do these benefits vary according to different digital currencies?

Question 2

Should the government intervene to support the development and usage of digital currencies and related businesses and technologies in the UK, or maintain the status quo? If the government were to intervene, what action should it take?

Question 3

If the government were to regulate digital currencies, which types of digital currency should be covered? Should it create a bespoke regulatory regime, or regulate through an existing national, European or international regime? For each option: what are the advantages and disadvantages? What are the possible unintended consequences (for instance, creating a barrier to entry due to compliance costs)?

Question 4

Are there currently barriers to digital currency businesses setting up in the UK? If so, what are they?

Question 5

What are the potential benefits of this distributed ledger technology? How significant are these benefits?

Question 6

What risks do digital currencies pose to users? How significant are these risks? How do these risks vary according to different digital currencies?

Question 7

Should the government intervene to address these risks, or maintain the status quo? What are the outcomes of taking no action? Would the market be able to address these risks itself?

Question 8

Should the government regulate digital currencies to protect users? If so, should it create a bespoke regime, or regulate through an existing national, European or international regime? For each option: what are the advantages and disadvantages? What are possible unintended consequences (for instance, creating a barrier to entry due to compliance costs)? What other means could the government use to mitigate user detriment apart from regulation?

Question 9

What are the crime risks associated with digital currencies? How significant are these risks? How do these risks vary according to different digital currencies?

Question 10

Should the government intervene to address these risks, or maintain the status quo? What are the outcomes of taking no action?

Question 11

If the government were to take action to address the risks of financial crime, should it introduce regulation, or use other powers? If the government were to introduce regulation, should it create a bespoke regime, or regulate through an existing national, European or international regime? For each option: what are the advantages and disadvantages? What are possible unintended consequences (for instance, creating a barrier to entry due to compliance costs)? What has been the impact of FinCEN’s decision in the USA on digital currencies?

Question 12

What difficulties could occur with digital currencies and financial sanctions?

Question 13

What risks do digital currencies pose to monetary and financial stability? How significant are these risks?

There can’t be many within the UK Bitcoin community who don’t have a view on at least a couple of those questions. While people’s views might differ on specific points, it can only be a good sign that proper research is being carried out at a high level into the subject. Hopefully that will avoid some of the mistakes that have plagued other jurisdictions.