Chancellor's Bitcoin viability study hopes to 'cement Britain's position' in global finance

By Peter Gothard
07 Aug 2014 View Comments

In the lead-up to a general election, it's never easy to decide whether government tech-sector pronouncements represent progress, or vote-grabbing desperation.

But either way, Chancellor George Osborne has revealed that he believes in the future of virtual currencies, unveiling plans to turn the UK into a leading centre for virtual currency trade, starting with a study due to be released this autumn.

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"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," said Osborne, speaking at the launch of new finance industry body Innovate Finance yesterday. 

"Key to the government's long-term economic plan is cementing Britain's position as the centre of global finance," he continued.

Chief executive and director of Innovate Finance, Claire Cockerton, added that the time has come for "radical transformation" of the financial services industry.

But is now a good time for the UK government to be taking a sudden interest in virtual currency, and Bitcoin in particular?

As late as last December, Bitcoin was trading at $1,200 per coin, with predictions suggesting that it could rise as high $40,000. But since then, the value of the currency - which requires complex computer algorithms to be generated - has reduced to just under $600 a coin. 

New York State has recently proposed a licensing framework for trading Bitcoin, so Osborne could just be attempting to play keepy-uppy with the international financial players. Or it could, as mentioned earlier, be an attempt to make his party look on top of their game come the next election.

It's certainly true to say that, while hype may have sent Bitcoin's value higher than it should have been late last year, the value of the currency certainly hasn't dropped close to where it was back in late 2013, when it typically came in at below $200 a coin.

And with the likes of Dell now accepting the currency, the currency's "slump" could actually be evidence of Bitcoin stabilising in value, and therefore becoming the legitimate currency that Osborne - and any other economic decision-maker - should begin to take notice of. 

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