Canada Should Listen to UK Treasury’s Questions About Digital Currency Investing
Governments, financial institutions, banks, and fintech firms are almost all taking measures to assess the impact and potential of digital currencies and blockchain technologies. Very few organizations who could be influenced by the growth of this new economy are still ignoring it. The most recent global move has been by the UK. The nation is asking questions about digital currency investing that all countries – especially Canada – should pay attention to.
Whether the action is active blockchain technology development, research, investment, or regulation, organizations are asking key questions of the industry.
Investors should take note of the answers gained to effectively manage their own foray into digital currency or blockchain markets.
UK Treasury is the latest to launch an inquiry into digital currencies
Members of Parliament in the UK will aim to understand the impact and opportunities that digital currencies and blockchain technologies present. The MPs will look into how consumers and businesses in the UK can remain protected without stifling innovation.
“The Treasury Committee will look at the potential risks that digital currencies could generate for consumers, businesses, and governments, including those relating to volatility, money laundering, and cyber-crime,” said Nicky Morgan, committee chair. “We will also examine the potential benefits of cryptocurrencies and the technology underpinning them, how they can create innovative opportunities, and to what extent they could disrupt the economy and replace traditional means of payment.”
The Committee will also consider how governments and regulators in other countries are approaching digital currencies and what lessons the UK can learn.
The UK’s Financial Conduct Authority (FCA) has recently formed an agreement with the US Commodity Futures Trading Commission (CFTC) to collaborate on a framework for fintech innovation and regulation. In 2016, the UK government began trials for a blockchain-based welfare payments system in collaboration with Barclays, RWE, fintech startup GovCoin and University College London.
The Bank of England is currently at the very early stages of examining the potential of a central digital currency. The Financial Conduct Authority (FCA) published discussion papers in 2017, but as of yet, the UK has taken no steps towards real regulation or adoption of digital currencies and blockchain technology.
Developments in the UK indicate that it is by no means ignoring the potential of digital currencies and blockchain technologies, but that leaps into actual adoption maybe somewhat behind Canada.
Canada’s actions speak louder than words
In Canada, there appears to be less questioning than in the UK and more decisive action.
The CSA was early to define digital currencies as securities and create a regulatory sandbox to support fintech firms. Canada also formed an alliance with France’s AMF, and the Government of Canada is trialing the use of blockchain technology to make government research grant and funding information more transparent.
Further, the Bank of Canada produced a report in November 2017 entitled “Central Bank Digital Currency Motivations and Implications,” which explores the possibility of a Canadian government led digital currency. Research by the Bank of Canada into digital currencies has been ongoing and comprehensive for a number of years.
Back in 2016, Payments Canada, the Bank of Canada, other Canadian banks and a technology consortium R3 built and tested a wholesale interbank payment system using blockchain or distributed ledger technology (DLT). The project, codenamed “Jasper,” achieved some success but also identified weaknesses, the main ones being issues of security and scalability.
Governments around the globe are at varying stages of research, trials, regulation, and adoption. As of yet, there are few examples of collaboration or coordinated movement into a digital currency-based global economy.
Investors can, however, learn from the research conducted by organizations in Canada and abroad, whose expert teams are assessing digital currencies and blockchain technologies from every angle.
Image credit: HM Treasury logo
Buy Bitcoin, Ethereum, XRP, and other cryptocurrencies on Coinsquare.
Get the latest blockchain and digital currency news from Canada and around the world, delivered each week to your inbox.
Your Email address