The UK Treasury Committee has launched an inquiry into crypto-assets.
Calling for submissions of written evidence, it intends to explore the role of crypto-assets in the UK, as well as the opportunities and risks they bring to consumers and businesses.
It will examine whether cryptocurrencies are likely to replace traditional currencies, what opportunities and risks the use of crypto-assets pose for individuals and the economy, and their impact on social inclusion.
MPs will also explore how regulation could be balanced to provide protection for consumers without stifling innovation.
The Committee will seek to investigate whether regulation could benefit crypto-asset startups by improving consumer trust and resilience, and the potential impact of distributed ledger technology on financial institutions, including the Bank of England.
MPs are also interested in hearing from stakeholders and experts on how Governments and regulators in other countries are approaching crypto-assets, and what lessons the UK can learn from overseas.
At the end of May, the UK Treasury proposed legislation to regulate cryptocurrency companies in a consultation paper published in the wake of the Terra LUNA crypto and UST stablecoin collapse, which sent the entire sector into a downward spiral.
The paper highlighted the importance of stablecoins in innovation but also their impact upon wider financial stability, should systemic failures occur. The new rules as proposed would give the Bank of England with oversight over cryptocurrency firms, with the power to appoint an administrator in the event of a failure.
However the turmoil at the head of government, with Prime Minister Boris Johnson eventually resigning following the exit of many within his Cabinet, may put these plans on hold for some time.
“Crypto-assets have the potential to bring new and innovative changes to the UK financial system, the economy and broader society. However, there are also significant concerns around their use to launder funds, purchase illegal products, and evade international sanctions,” said Mel Stride MP, chair of the Committee.
“In recent months, the value of most crypto-assets 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.
“We look forward to receiving written evidence from experts and interested stakeholders on this important topic.”