Regulators to look at cryptocurrency rules amid Bitcoin concerns

Mark Carney, who heads the G20's Financial Stability Board as well as being the governor of the Bank of England, has said that global rule-makers will examine digital currencies, given their explosion in popularity over the last year.

Mr Carney told the Treasury Select Committee that he expected the FSB to discuss distributed-ledger technology, which underpins cryptocurrencies, and digital currencies themselves.

He also said that a tightening up of the rules around initial coin offerings - a virtual way to raise funds - was necessary.

The Financial Conduct Authority said last week it would undertake a deep dive around ICOs as a prelude to potentially more regulatory action. While countries like China have banned ICOs, the UK has allowed them but has warned investors of their risks.

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ICOs work by a company issuing tokens, typically in exchange for a cryptocurrency such as Ethereum. Tokens can be used to buy future services from the issuer or can be sold on. This year there have been 234 ICOs so far, raising a total of $3.7bn, according to data from Coinschedule, an ICO information provider.

Mr Carney was asked by the committee about bitcoin, which has seen its value soar this year from $1,000 per unit at the beginning of the year to over $17,000. He repeated previous statements from UK officials that despite the rise in bitcoin’s value, the authorities did not deem it as a risk to the UK’s overall financial stability.

He added that the BoE believes that the distributed-ledger technology underpinning bitcoin could be best applied to wholesale settlement technologies, but it was still some way off being deployed properly.

– Copyright The Financial Times Limited 2017