British lawmakers called for the regulation of the domestic cryptocurrency market which they claimed to be the “Wild West”, whilst insisting rules could help the UK become a “global centre for crypto-assets”.
In a report published by the British Parliament’s Treasury Committee on Wednesday, lawmakers claimed investors are “afforded very little protection” from a number of risks including no formal recourse for consumer compensation. It was no longer sustainable for the government nor regulators to continue issuing “feeble warnings” with no action, the committee added, insisting that regulation addressing consumer protection and anti-money laundering norms was the minimum measure required.
Volatile prices, hacking concerns among exchanges vulnerable to attacks, minimal consumer protection and money laundering concerns are all underlined as ‘problems’ by the report’s findings. The UK government and regulators’ “ambiguity” was no longer sustainable, it added.
“Bitcoin and other crypto-assets exist in the Wild West industry of crypto-assets. This unregulated industry leaves investors facing numerous risks,” said Treasury Committee chair Nicky Morgan. “Given the high price volatility, the hacking vulnerability of exchanges and the potential role in money laundering, the Treasury Committee strongly believes that regulation should be introduced.”
She added:
“It’s unsustainable for the Government and regulators to bumble along issuing feeble warnings to potential investors, yet refrain from acting…At a minimum, regulation should address consumer protection and anti-money laundering.”
In the same report, the Treasury Committee urged the government to evaluate the risks in the cryptocurrency sector to then assess whether the industry’s growth should be encouraged.
Regulation could lead to positive outcomes including increased liquidity for the cryptocurrency market, the Treasury Committee notably said.
Member of Parliament Nicky Morgan insisted:
“If the government decides that crypto-asset growth should be e1ncouraged, appropriate and proportionate regulation could see the UK become a global centre for this activity.”
Today’s report follows a formal inquiry launched by the UK’s Treasury Select Committee, a powerful group of cross-party MPs, into cryptocurrencies earlier this year.
U.K. authorities have, ironically, been urged to revisit their hands-off, wait and see approach by fintech firm Ripple, commonly associated with the cryptocurrency XRP. Earlier this year, Ripple’s head of regulatory relations Ryan Zagone called on British regulators to end the ‘Wild West’ era of cryptocurrencies, urging Britain to take a cue from Japan where exchanges are regulated and under supervision while cryptocurrencies like bitcoin are legal as a method of payment.
The British government has since launched a cryptocurrency task force comprising of Her Majesty’s Treasury, the Bank of England and the Financial Conduct Authority (the treasury, the central bank and the primary regulator respectively) to understand the sector’s risks and benefits. The working group agreed on a handful of key objectives during its first meeting earlier in May.
“The introduction of regulation should be treated as a matter of urgency,” the Treasury Committee said in its concluding summary of recommendations unveiled today.
Featured image from Shutterstock.
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