CryptoUK, a self-regulatory trade association for the UK cryptocurrency industry, has said that UK companies are improving at security to protect customers from cryptocurrency hacks, but that the government must be more decisive in creating sensible regulations.
This view was expressed by Iqbal Gandham, chairman of CryptoUK, as reported by New Zealand news portal Stuff.
CryptoUk represents some of the larger exchanges in the UK such as eToro, Coinbase, and Coinfloor. Gandham suggests to his members that they store at least of their virtual funds offline as protection against hacking.
The chairman maintains that the status quo regarding cryptocurrency security at the moment is very much down to a lack of decisive action at UK government level towards sensible regulation. The Uk government currently has a task force looking at that industry in order to recommend changes in legislation.
Gandham argues that government legislators haven’t done enough to protect the industry and this has resulted in UK consumers sending their money to risky exchanges or going overseas with their funds without really knowing the viability of exchanges used, adding:
“99.9% [of exchanges] have bank accounts in far-flung jurisdictions and UK consumers are sending their money to high-risk jurisdictions.”
Exchange giant Xapo’s security method is to bury encrypted computer servers in a mountainside and layer on electronic and physical safeguards, though most of the public don’t have USD 10 billion to store.
In the absence of having one’s own underground crypto vault carved into a Swiss mountainside with facial recognition and duplicate keys, cold storage wallets are now used by many of the general public and have been reputed to be the sensible way of cryptocurrency storage. Exchanges and third-party wallets hold private keys and should be avoided as storage. The risk of something going awry with such servers, or an unexpected shutdown, could result in investors’ coins evaporating into thin air.
The UK government may be able to tackle some of these security issues this year as it examines the risks of blockchain technology and cryptocurrency in financial services. The Cryptoassets Task Force, consisting of the UK Treasury and the Financial Conduct Authority (FCA), has been set up for this purpose and is expected to report back in the summer with its findings in a round table scheduled for next month.
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