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It’s been a good week for Bitcoin.
In addition to Blocksign’s Bitcoin-based electric signature launch on Tuesday, Britain’s Chancellor of the Exchequer, George Osborne is signaling that the UK wants to regulate Bitcoin, or virtual currency systems like it, as legal, digital cash, reports the Daily Mail.
Britain’s top financial cabinet minister George Osborne spoke at Level 39’s Innovate Finance launch event Tuesday when he stated the government’s intention to make London the Financial Technology (“FinTech”) company of the world. The FinTech focused reforms that the Chancellor referred to are to start with government studies, or what Osborne calls the “a major programme of work exploring the potential of virtual currencies and digital money.”
Osbourne went on to state how important virtual currencies, mobile payments and other digital financial technologies are to modern economies:
“These alternative payment systems are popular because they are quick, cheap, and convenient – and I want to see whether we can make more use of them for the benefit of the UK economy and British consumers.”
While early 2014 saw the US and Japan (two of the world’s top three economies) make moves to downgrade Bitcoin’s status by classifying it as property rather than currency, Britain is moving in the opposite direction by embracing what peer-to-peer currencies like Bitcoin have to offer the financial sector.
Britain’s interest in virtual currencies like Bitcoin is as strategic as it is forward thinking. Recall that since the end of WWII, the US dollar has long been the “anchor” or “reserve currency” used by most world governments for international trade. This global demand for dollars leads to a lower borrowing rate for the US, saving people and businesses a very advantageous $100 billion per year. If Britain can properly regulate virtual currencies, other nations may find it cheaper to finance international trade with options like Bitcoin rather than the US dollar, which can, much to the chagrin of other nations, often be used as a tool to exert American political will around the world.
More than 70 years ago Britain’s John Maynard Keynes (of Keynsian economics fame) suggested a “world reserve currency” called the Bancor. The idea didn’t take off then, but in the here and now the regulation of virtual, stateless currencies could be a small step in that direction. Regardless, the UK’s lead could cause other nations to follow, paving a legitimate path for a currency associated with nefarious dealings.
Don’t expect to pay for your bangers and mash with government-regulated Bitcoin any time soon. Despite their new interest in FinTech, Britain, like most governments, rarely rushes when it comes to managing the cogs of the nation’s financial machinery. In addition to looking into the upside of integrating these financial innovations with the British economy, Osborne’s study will also make sure that the British government is “alert to the risks that accompany any new technology.”
Dwayne De Freitas is a marketing and technology expert based in Boulder, Colorado. He regularly hosts The Drill Down podcast, and you can follow him on Twitter at @dwayned.