A recent study conducted by Imperial College London has revealed that cryptocurrencies are likely to become the next mainstream form of payment for online purchases. The 2018 report Cryptocurrencies: Overcoming Barriers to Trust and Adoption argued that cryptocurrencies are already fulfilling one of the three criteria of money.
The fast-paced world of FinTech has led to the development of many new payment technologies which facilitate easier, quicker and more global transactions. With consumer expectations and businesses responding to these changes, there has also been a notable increase in investments made into cryptocurrencies and the number of crypto-assets in circulation.
Bitcoin is the original and most widely used cryptocurrency, which has received negative attention in the past for its involvement with Silk Road and other online black markets. In addition to facilitating the purchases of illegal goods and services, the anonymity Bitcoin and other cryptocurrencies grant users, enables money laundering, theft and other criminal activity. Moreover, the volatility of Bitcoin prices poses an inherent risk of investment and leaves the currency vulnerable to market manipulation.
There are no regulations currently imposed on cryptocurrencies within the UK. The Financial Conduct Authority is working with the Bank of England and the UK Treasury to monitor cryptocurrencies’ risk to financial stability. Their recommendations will likely influence any regulations introduced, however, they will not propose any future measures until cryptocurrencies pose a significant financial risk to UK markets.
Financial experts and the media look towards international legislation to predict what actions our government will take if cryptocurrencies become mainstream. These actions range in severity, from implementing a nationwide ban to introducing rules which seek to reduce criminal activity and remove anonymity.
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