In response to the UK government’s call to for information on digital currencies last year, US-based Silicon Valley Bank suggested that they should start regulating the bitcoin industry. Ideally, the UK could work with other financial regulators across the globe to come up with a framework for cryptocurrency oversight.
The bank mentioned that regulation could help mitigate the risks associated with digital currencies and provide a framework for companies in the space to operate. If this were to happen, cryptocurrencies would become more appealing to users.
Bitcoin Industry Regulation
In some US states like New York, bitcoin industry regulation has had mixed reviews. The recently implemented BitLicense framework was seen to be stifling to innovation, as it could be very costly for startup companies to obtain regulatory approval for their products.
However, the prominent use of bitcoin in illegal and underground criminal activity stresses the need for oversight. The infamous online drug marketplace Silk Road has been shut down and its owner put behind bars, underscoring the need to monitor potential cryptocurrency usage in illegal dealings.
“If this [digital currency] is to be regulated, then yes, the [UK] government should lead and ensure accountability, sustainability, credibility and liquidity of digital currency participants or designate an appropriate body to the same,” indicated the four-page document. “Taking no action could leave the UK static to global economy change – if others go forward.”
Indeed the UK government could be one of the best leaders when it comes to creating a unified approach towards bitcoin industry regulation, as they are seen to be relatively open-minded to cryptocurrency developments. Their call for information has yielded several recommendations from top financial institutions, some of which are suggesting a creation of a government-based cryptocurrency and others advising the regulation of bitcoin wallets.