On 13 December 2013, the European Banking Authority warned the public about the risks of buying, holding and trading virtual currencies: “Consumers are not protected through regulation when using virtual currencies … and may be at risk of losing their money”.Regulation, then, is on the table. In the UK, there are five potential virtual currency regulators: the Bank of England, the Prudential Regulation Authority, the Financial Conduct Authority, the Payment Systems Regulator, and HM Treasury. But it isn’t that clear cut. The Bank of England does not believe that digital currencies “pose a material risk to monetary or financial stability in the United Kingdom”, so it’s not proposing to do anything for now. The PRA has not shown any interest in virtual currencies – a position that might be reasonable (it works closely with the Bank of England), but is still surprising: the EBA expressly invited it (as a European regulator) to encourage the banks it regulates not to buy, hold or sell virtual currencies, some are already doing so, and it seems to have chosen not to intervene (at least for now). Although the FCA republished the EBA’s warning, and it’s demonstrated an interest in FinTech, it hasn’t said or done anything so far which suggests that it will seek to persuade e-money issuers not to buy, hold or sell virtual currencies; nor has it said anything which suggests that it wants to regulate virtual currencies. Find out more about Bitcoin:
- Cryptocurrency and its role in the future of the UK economy
- How to prepare your business for the future of Bitcoin
- Bitcoin: Friend or for for small businesses?
Share this story