The Government is to explore the role that digital currencies, such as Bitcoin, could play in the financial system, George Osborne announced today.
The Chancellor unveiled plans to look into the regulation of virtual and digital currencies, and the risks associated with them – in a bid to boost the UK’s Financial Technology (FinTech) sector.
The Government is set to publish a strategy document later this year setting out how the UK can become the “global centre of financial innovation”, the Treasury said. Other measures will include plans to make it easier for small businesses to get loans from sources other than banks.
What is Bitcoin?
Bitcoin is a virtual currency that enables people to pay for goods and services from their computer or mobile device independent of any bank or central authority. Users can generate Bitcoins by signing up and creating an online wallet for themselves and then carrying out transactions directly with others who use the service. Bitcoin has its own value and is not tied to any physical currency.
More than 60,000 online retailers now accept virtual currencies worldwide and the growing popularity has seen backers of the currencies push for greater mainstream adoption. But the use of Bitcoins can be seen as controversial as all transactions are encrypted and hard to trace. And there have been numerous reports of it being used as part of illegal online activity.
Britain to become ‘centre of global finance’
The UK’s alternative finance market is expected to be worth £1.6 billion in 2014, the Treasury said.
Mr Osborne said: “Key to the Government’s long term economic plan is cementing Britain’s position as the centre of global finance. That’s why I’m delighted to announce a series of major steps today to help our FinTech firms continue to grow and succeed.”
Business Secretary Vince Cable said he is determined to force banks to refer businesses to alternative lenders, as SMEs often give up if they are turned down for finance by their bank.
Other measures announced include a consultation on digital communications, a review of the part technology will play in the future of the FinTech sector, a £100 million extension to investment for SMEs, a push to promote Britain in overseas markets and awards for those who come up with solutions to help small businesses access finance.
Source: Investec
