The inquiry will cover the role of digital currencies in the UK, including the opportunities and risks that digital currencies may bring to consumers, businesses, and the government.

It will examine the potential impact of distributed ledger technology – such as blockchain – on financial institutions, including the central bank, and financial infrastructure.

It will also scrutinise the regulatory response to digital currencies from the government, the Financial Conduct Authority, and the Bank of England, and how regulation could be balanced to provide adequate protection for consumers and businesses without stifling innovation.

Nicky Morgan, chair of the Treasury committee, said: ‘People are becoming increasingly aware of cryptocurrencies such as Bitcoin, but they may not be aware that they are currently unregulated in the UK, and that there is no protection for individual investors.

‘The Treasury committee will look at the potential risks that digital currencies could generate for consumers, businesses, and governments, including those relating to volatility, money laundering, and cyber-crime.

‘We will also examine the potential benefits of cryptocurrencies and the technology underpinning them, how they can create innovative opportunities, and to what extent they could disrupt the economy and replace traditional means of payment.’

Morgan said information about the committee’s meetings for the inquiry will be announced later.

Details of the digital currency inquiry are here.

Report by Pat Sweet