The potential regulation of UK bitcoin companies was discussed at a meeting this morning at the government's headquarters, 10 Downing Street.
Hosted by the Number 10 Policy Unit, the Financial Innovators Summit was attended by a number of financial technology companies, UK regulators and government members.
Tom Robinson, co-founder of yet-to-launch UK virtual currency exchange BitPrice, attended the 1.5-hour meeting. He said: "The attendees ranged from crowdfunding companies to payment services businesses. There were also several representatives from the treasury, the FCA, the Number 10 Policy Unit, the Department for Business, Innovation and Skills and a few of the smaller banks."
He went on to say the organisers of the meeting mentioned bitcoin in their introductory speech, describing it along the lines of an "exciting new area of financial innovation, but one that faces some regulatory issues".
Lack of guidance
Later on in the meeting, Robinson raised the point that the lack of clear regulatory guidance in the UK is stifling innovation in the digital currency space.
"We think it should be appropriate legislation, but we also think it should be put in place fairly rapidly, otherwise the UK is going to lose out."
One of the meeting attendees suggested there should be an international approach to the regulation of bitcoin and other virtual currencies, but Robinson questioned how easy this would be and how long it would take to create. He suggested that, while the UK can tend to follow in the footsteps of the US, regulators at the meeting said they are going to look into the subject themselves and make their own decisions.
Robinson said he left the meeting feeling largely optimistic, as the FCA said it is actively looking into virtual currencies and how they should be regulated. However, the body didn't give any kind of time frame on how long it would take to come to a decision.
"The very broad point the FCA made was that it needs to balance the concerns and the security of consumers against the wish to increase competition in the financial services sector and to encourage innovation," he explained.
A spokesperson from the FCA said: "Whilst the FCA does not regulate bitcoins, businesses providing services related to bitcoins, or other digital currencies, should consider whether they are carrying on regulated activities. As you would expect, the FCA does watch new developments in the market."
Robinson thinks one of the main issues faced not only by digital currency businesses, but all money services companies, is that it's very difficult to find a bank to work with.
"The regulators' current point of view is that it's up to the banks – they can make a commercial decision not to work with a company. Although, companies at the meeting made the point that banks are making these 'commercial decisions' because of the regulatory framework imposed on them by the regulators. That framework should be changed."
BitPrice is currently lobbying, meeting with regulators and meeting with banks in an attempt to make it easier for UK-based bitcoin companies to gain bank accounts.
UK Bitcoin Foundation
Robinson is one of around six people who have been involved in creating the UK chapter of the Bitcoin Foundation.
"We will follow the broad aims of the Bitcoin Foundation to protect, promote and standardise bitcoin with a focus on the UK. We will represent bitcoin businesses and users when they come up against regulators and the government," he explained.
The UK chapter's board is now in place, but it is waiting for the foundation to explain exactly how the relationship between the two will work.