Most people now view bitcoin and other digital currencies as an “asset class” rather than a means of payment as originally intended, Mary Starks, Director of Competition, Financial Conduct Authority (FCA), said recently.

Speaking at the Authority for Consumers & Markets Conference Panel, Netherlands, Starks focused on the risks to consumers and competition with the advent of blockchain technology.

According to Starks, the shift in the perception of people on digital currencies from means of payments to asset class is both cause and effect of the volatility in their price.

“Most people now view Bitcoin and other such coins as an asset class rather than a means of payment – hence ‘cryptoassets’. Which is probably both cause and effect of swings in the value. In 2017, the price of Bitcoin appreciated from around 850 euro to over 14,000 euro (that’s 1600%). Why would I use Bitcoin to buy a pint of beer, when tomorrow it could be worth 20% more?” she said.

Starks further said that this shift has a range of policy implications. The FCA is a part of a cryptocurrency task force set up by the UK government and will assess whether further regulatory action is required and monitor international developments.

Regarding blockchain technology, she said that she is optimistic about the promise for the ongoing developments to improve financial services markets. Pointing out the trials being conducted in the FCA’s sandbox, Starks said:

“Of course these tests are still in very early days and it remains to be seen whether these benefits hold up in a commercial setting but the initial findings are very positive.”