The UK government has announced plans to regulate some cryptocurrencies.
Treasury Secretary John Glen said “stablecoins” would give people confidence to make payments using digital currencies.
Stablecoins are cryptocurrencies intended to have a stable value tied to traditional currencies or to a commodity such as gold.
The Treasury plans to consult on creating regulations for a broader range of cryptocurrencies later this year.
- What is cryptocurrency and how does it work?
- Why is the richest man in the world talking about Bitcoin?
Cryptocurrencies like Bitcoin or Dogecoin are virtual or digital currencies.
They can be used to buy products and services, but not many stores accept them yet and some countries have banned them entirely.
The Treasury has not yet confirmed which cryptocurrencies it classifies as so-called “stablecoins.”
Bitcoin is believed to be the first cryptocurrency ever created. It first came to the scene in 2009 and since then many other cryptocurrencies have been created and there are now thousands.
The exchange of these digital currencies takes place through so-called “peer-to-peer” transactions – no banks or other third parties are involved.
Instead, every transaction that has ever been made is recorded in a massive database known as the blockchain.
Cryptocurrency markets have been described as volatile, however, some companies are beginning to partake in their growing influence.
Elon Musk, the world’s richest person, has voiced his support for virtual currencies, saying bitcoin is a “good thing.”
Mr Glen said the UK sees “enormous potential in crypto”.
“We have a detailed plan… this is a new world for the newly regulated and for regulators,” he told UK Fintech Week.
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