Announcements made in the 2015 Budget revealed plans to increase spending on the digital currency as part of the launch of a new initiative that brings together research councils, the Alan Turing Institute and Digital Catapult. The Digital Catapult and HM Treasury were not immediately available for comment on the scope of the project.
Other measures announced include the intention to apply anti-money laundering regulations to digital currency exchanges in the UK, in order to "support innovation and prevent criminal use". In addition, the governemnt will "work with the British Standards Institution and the digital currency industry to develop voluntary standards for consumer protection".
Cryptocurrencies such as Bitcoin and its variants have been deemed unsafe by financial regulators in the past, following high-profile incidents such as the bankruptcy of a major exchange, Mt Gox. Meanwhile the anonymous nature of transactions has led to use among criminal gangs.
Nevertheless, digital currencies have moved towards mainstream acceptance with more companies accepting bitcoin payments, and a recent study from analysts Juniper Research predicting that the more than 5 million people will use the technology to transactions by 2019.
The UK government has previously indicated its intention to put Britain at the forefront of digital currency developments, launching a consultation into how the technology should be used last year.
Economic Secretary to the Treasury, Andrea Leadsom, said at the time that "as well as the risks, that digital currencies could bring to Britain's economy, businesses and customers".