Crypto Space in Urgent Need of Regulation, Says U.K. Treasury Committee
The United Kingdom Treasury Committee has counseled the U.K. government to further regulate the crypto industry, saying the cryptoeconomy still largely remains an unregulated “wild west.” The committee called for action regarding investor protections, poor security infrastructure, and money laundering.
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Crypto Into the Regulatory Fold
Under the banner of safeguarding investors from a “litany of risks” in the fledgling crypto space, lawmakers in the House of Commons Treasury Committee have urged the U.K. government to introduce regulations for the burgeoning industry.
According to the select committee’s “unanimous” report, cryptocurrencies are sentiment-driven investment instruments prone to high volatility. Furthermore, the MPs argued digital assets can easily play a role in money laundering and terrorism financing and that hacks currently abound in the ecosystem.
Hence, the committee declared the U.K. government should take action on these issues rather than pronounce ineffective warnings.
“It’s unsustainable for the Government and regulators to bumble along issuing feeble warnings to potential investors, yet refrain from acting,” committee chair Nicky Morgan said.
Bringing Crypto Out of ‘Wild West’ by Appointing Market Regulator
The Treasury Committee argued that the Financial Conduct Authority (FCA) is the most suitable domestic regulator for the sector, particularly for ensuring that crypto businesses in the U.K. comply with anti-money laundering and counter-terrorist financing laws. Accordingly, the select committee suggested the government give explicit legal authority to the FCA to police crypto-related issues.
The U.K. lawmakers said appointing the FCA in such a way would protect consumers from crypto scams.
Even still, the Treasury Committee acknowledged that cryptocurrencies aren’t going anywhere, but that the U.K. nook of the sector urgently needs a minimum regulatory framework:
“Crypto-assets have been embedded in certain pockets of society and industry, and it is highly likely that they are here to stay. The U.K. Government and financial services regulators appear to be deciding whether they will allow the current “wild west’ situation to continue, or whether they are going to introduce regulation. The current ambiguity surrounding the Government’s and the regulators’ positions is clearly not sustainable.”
Pointing Toward Clarity
The select committee opined that if regulated ‘proportionately’ there could be positive results in the cryptocurrency industry. They argued a favorable regulatory environment would attract institutional investors to the market, hence increasing liquidity and making the U.K. a “global center” in the international cryptoeconomy.
The U.K. is just the latest front regulators around the world contending with cryptocurrencies. For now, the main challenge is striking the right balance in regulating the sector without inhibiting innovation.
Will the U.K. government appoint FCA as a crypto regulator? Share your views in the comments section.
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