By Greg Morcroft - The British Treasury will review ways the City of London can steal a step on rivals trying to master the rise of virtual currencies and become the central trading hub for leading contender bitcoin, Chancellor of the Exchequer George Osborne announced Wednesday.
According to the Guardian, the report, to be released this fall, will lay out the benefits and risks alike associated with bitcoin and other digital currencies.
The paper quoted Osborne, the U.K.'s finance chief, as saying, “It’s only by harnessing innovations in finance, alongside our existing world-class knowledge and skills in financial services, that we’ll ensure Britain’s financial sector continues to meet the diverse needs of businesses and consumers, here and around the globe, and create the jobs and growth we all want to see in the future. ... Key to the government’s long- term economic plan is cementing Britain’s position as the center of global finance."
Bitcoins, created in 2009, gained widespread popularity and their price topped $1,000 in 2012, and they became a legitimate means of exchange in the U.S. But since the collapse of Tokyo-based Mt. Gox, one of the largest bitcoin exchanges in the world, in February 2014, regulators have started looking more closely at virtual currencies.
Last month Google NASDAQ:GOOGL began publishing the bitcoin exchange rate just as it does for other currencies like the dollar and the euro.
The Mountain View, California, search giant rolled out support for the virtual currency nearly a month after Google Finance integrated data from Coinbase, a bitcoin wallet and exchange platform.
Google’s move to integrate bitcoin conversions into its search engine follows the February addition, by Microsoft Corp. NASDAQ:MSFT, of bitcoin currency conversions to Bing and the integration of bitcoin prices into Yahoo Finance by Yahoo Inc. NASDAQ:YHOO.
The move in the U.K., home to one of the world's top financial centers in London, follows a move in New York state to license bitcoin trading, according to the Guardian. New York City is currently the world's leading financial center.
Not all international banking groups are keen on bitcoin, though. In July the European Banking Authority advised all European banks against “buying, holding, or selling virtual currencies,” until an adequate regulatory regime is in place to prevent their misuse.
“While there are some potential benefits from virtual currencies, such as faster and cheaper transactions, as well as financial inclusion, the risks outweigh the benefits,” the EBA, which is the European Union’s banking regulatory body, said in a statement released at the time. The regulator identified more than 70 risks associated with the use of virtual currencies, including their threat to the financial integrity of a user and their use in money-laundering and other financial crimes.