Bitcoin has been expanding in its acceptance in London the past several months but no statement from England on how they plan to define Bitcoin until today. The Bank of England according to Coin Desk this morning has released a paper defining Bitcoin and how it should be viewed in the world of monetary exchange.
The Bank of England which has been keenly aware of the popular rise in Bitcoin due to its ability to move monetary transactions around the world in a peer-to-peer network has placed Bitcoin in the role as a commodity and released this statement in its report out this morning, ‘digital currencies are not at present widely used as a medium of exchange. Instead, their popularity largely derives from their ability to serve as an asset class. As such they may have more conceptual similarities to commodities, such as gold, than money.’
The Bank of England is keen to make a distinction between e-money that is used in Pay Pal or Google wallet in the sense that it is attached to a system of value. Digital currency such as Bitcoin does not have a value connected to anything but the production of it on a computer program and it is a complicated one. Since the supply of digital currency is limited and the rate of exchange is not fixed it is distinctly different from e money that can be based on currency and exchange rates.
Although the Bank of England and the European Central Bank (ECB) have issued warnings regarding the volatility of Bitcoin and the risks of fraud and international theft through hacking, the Bank of England does raise alarm or concern over the digital currency. Its report states, ‘The current levels of economic activity and payments involving bitcoin are too light to have a material impact on [the bank's] monetary or financial stability objectives in the short term.’
The Bank of England’s chief cashier, Chris Salmon, views Bitcoin as ‘innovative’ and can be a complement to regular currency money.
Bitcoin is finding its place across the globe. The Monetary Authority of Singapore (MAS) has announced today that it will regulate Bitcoin and states today, ‘MAS is taking a targeted regulatory approach to virtual currencies to specifically address money laundering and terrorist financing risks. Consumers and businesses should take note of the broader risks that dealing in virtual currencies entails and should exercise the necessary caution.’
Singapore will treat Bitcoin as it does cash transactions that exist with money changers in the country.
To view more on Bitcoin see the list below in Author’s suggestions and view the video atop this article from the WSJ.
Twitter Victoria Wagner@victoriaross888