Government is ‘neither blindly supportive nor dismissive’ of the Bitcoin industry’s future in the island, a senior civil servant insists.
Chris Corlett, chief executive of the Department of Economic Development, said it was in the national interest to balance effectively the risks and opportunities of digital currencies.
He was speaking after the island’s Financial Supervision Commission referred to Bitcoin in a statement warning about the risks of unregulated investments.
In his foreword to the FSC’s annual report, to be presented to Tynwald next week, chief executive John Aspden spoke of the growing market for virtual currencies and pointed out that the government has deferred introducing ‘any prudential oversight until there is more of an international consensus on how it could be framed’.
And he added: ‘In the meantime, the Commission’s view is that this can be a high risk area for participants who do not understand the risks involved, and they need to be aware that there is no government protection in place for them.’
But DED boss Mr Corlett said: ‘Currently the Isle of Man does not offer any investment funds in digital currency.
‘If the investment was promoted by a local firm as an investment then it is regulated and we would want the regulator to take action. We have no evidence that this is the case and are not aware of a single complaint yet.
‘The use of digital currencies taking place upon the island is typically small transactional payments only. To contrast, scam property investments can potentially result in losses of many thousands of pounds.
‘There is nothing inherently ‘wrong’ with buying Bitcoins or other such digital currencies. This is an area that the government wants to ensure is considered logically not irrationally. We are neither blindly supportive nor dismissive of the industry’s future.’
Mr Corlett said the Manx Government recognises this sector is in its infancy. He said: ‘We need to ensure we understand its risks so that we can protect consumers and keep out crime. That is why we are legislating to do so with the inclusion of digital currencies in the Proceeds of Crime Act and in the forthcoming Designated Businesses Bill.
‘Equally, digital currency poses economic opportunities and so we are in talks with leaders in this field which could attract reputable businesses and create jobs in our economy. We are working to balance these risks with the opportunities effectively in our national interest. If the position changes we will not be slow to act. Given it is early days, many people are understandably seeking more information. We are aware that it would be easy for a misplaced comment to cause confusion.’
The goverment says it exploring options to allow residents to pay their tax bills in Bitcoin.
The Manx Labour Party has raised concerns about the government’s plan to establish a cryptocurrency industry and is calling for the DED to carry out a full risk assessment.
Last month, Capital Treasury Services announced it was withdrawing payment services to the Manx digital currency sector following pressure from its British banking partners.
The move overshadowed the inaugural Crypto Valley Summit held in Douglas.