Digital currencies have more risks than benefits, MasterCard claims

The global payment processor MasterCard claims that digital currency transaction costs may currently be lower than those involved in traditional payments methods, but this is because digital currency service providers do not currently bear the cost of complying with consumer protection and anti-money laundering laws.

However, if regulation requiring this is introduced, the company says, the transaction costs will soon rise. MasterCards submission suggests any new regulation the UK government creates should address the current lack of consumer protections in the digital currency space.

One of the risks it flags is that consumers currently have no form of official redress if they use digital currency to make a purchase and the merchant fails to deliver their goods. MasterCard also believes Bitcoin users are in danger as the cost of mining bitcoins will rise when usage of the currency increases, until the cost becomes unsustainable.

MasterCard suggests the government should create regulation that addresses the risks associated with cryptocurrency while still enabling lawful digital currency businesses to grow.

The current blockchain process does not provide sufficient transparency, and regulation should require all transactions to go through regulated and transparent administrators, which would be supervised by relevant domestic, European or global authorities.

Digital currency companies should also be licensed and supervised in the same way non-bank money transmitters are. MasterCard also believes that the government should develop consumer protections which would force digital currency companies to create a formal consumer complaint process and enable the reversal of unauthorised charges.