A report published by the United Kingdom Treasury Committee has called for the “Wild West” crypto-asset market to be regulated.
The committee, which is comprised of Members of Parliament (MPs), has begun to push lawmakers to begin addressing the numerous risks that it has identified in its report on crypto-assets, published on 19 September.
Summarily, the report acknowledges that cryptocurrencies and “most” initial coin offerings (ICOs) do not fall within the remit of the UK’s financial watchdog the Financial Conduct Authority (FCA) who, in August, established an international regulatory network for financial innovations.
Having assessed the benefits, limitations and risks posed by digital currencies, as well as the present regulatory landscape with special consideration to the voluntary self-regulating bodies within the crypto-asset industry, the Treasury Committee said:
“As the Government and regulators decide whether the current Wild West situation is allowed to continue, or whether they are going to introduce regulation, consumers remain unprotected. The Committee strongly believes that regulation should be introduced. At a minimum, regulation should address consumer protection and Anti-Money Laundering (AML).”
The committee wishes to see the FCA have more legal powers in this area, enabling it to “execute its duties of protecting consumers and maintaining market integrity”.
Additionally, the report mentions that cryptocurrency exchanges are not currently included in AML regulations; this a factor that it believes contributes to the use of cryptocurrencies for illicit activities.
It was recently reported that FCA chief Andrew Bailey was in favor of a “balanced approach” to the cryptocurrency industry, claiming that the FCA was eager to explore blockchain technologies.
With regards to the UK blockchain industry, Lord Bates, Minister of State at the Department for International Development, recently said that the government had not yet formally assessed the implications of the present bear market on domestic blockchain enterprise.
This came in response to a colleague who questioned whether or not such an assessment had been made during a parliamentary meeting.
The Treasury Report reflects these concerns with its remarks on market volatility, highlighting the 2017 market highs compared to the present lows, writing, “Investors are exposed to large potential gains, but correspondingly a greater risk of loss. Accordingly, investors should be prepared to lose all their money.”
The Treasury Committee reports that “the introduction of regulation should be treated as a matter of urgency” in order to protect consumers and investors from “growing risks”. ICOs are high on the list of priorities also, as the FCA can do little to protect individuals from financial losses.
Furthermore, at an industrial level, the report acknowledges that supply chain management and financial services had been implementing blockchain into their systems, although this should be pursued as a joint effort between government and industry to “identify what problems exist and consider whether blockchain offers the most appropriate solution”.
Among many other facets of the industry developments and international regulation efforts, the report is positive that should the UK create a “proportionate regulatory environment” for cryptocurrencies and all related blockchain technologies, it will continue to be a potential global hub for the industry.
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