BITCOIN faces a probe by MPs over fears that investors could lose EVERYTHING – and be at risk of fraud.
Treasury chairman Nicky Morgan said that UK politicians will be looking into cryptocurrencies in future after warnings from the Bank of England and Financial Conduct Authority.
Bitcoin is a virtual currency that was created in 2009 – and the total value of all Bitcoin in existence is now more than £185billion.
Its price has soared around 1500 per cent over the past year or so – attracting millions to buy parts of the currency online – but has taken a tumble since last month.
Economists warn there are serious fears that the Bitcoin bubble will burst and the value will plummet – leaving investors out of pocket.
Ms Morgan told the Evening Standard today: “We are going to look at the whole issue of cryptocurrencies.”
She went on: “Clearly there is a concern… the Financial Conduct Authority and the Bank of England have said people need to be very aware that they could lose everything in terms of Bitcoin.
“You don’t want people who can’t afford to get their fingers badly burnt to run into problems.”
She said that Britain would continue to watch the situation and examine the risks, but did not want to “stamp out innovation.”
Yesterday the price of Bitcoin and other cryptocurrencies dropped sharply after South Korea announced plans for a trading ban – leading to fears it could also be banned elsewhere.
The move comes after police and tax authorities reportedly raided local exchanges this week over alleged tax evasion.
Bitcoin fell more than 10 per cent from over $15,000 (£11,100) to around $13,300 (£9,800) in the early hours of the morning, before recovering slightly.
Ripple and Litecoin also suffered loses due to the announcement.
Justice Minister Park Sang-Ki said Seoul was preparing a bill to shut down the country’s virtual coin exchanges.
Earlier this week, cryptocurrency market crashed by £102BILLION instantly after CoinMarketCap – arguably the industry’s most prominent global index – suddenly removed a group of Korean exchanges from its price calculations.
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The Bank of England has said that cryptocurrencies “do not currently pose a material risk to monetary or financial stability in the UK.”
However, they have set up a research unit to examine them and find out more about how they could change the banking system.
But the Financial Conduct Authority warned last year that they are “high risk” and investors must be aware of the risks.
They said: “Cryptocurrency CFDs are an extremely high-risk, speculative investment. You should be aware of the risks involved and fully consider whether investing in cryptocurrency CFDs is appropriate for you.”