U.K. Treasury Calls An Urgent Demand To Regulate The ‘Wild West’ Cryptocurrency Market

Today, the British lawmakers published a report through the British Parliament’s Treasury Committee pressing the need of introducing proper regulation in the country burgeoning cryptocurrency market.

The report stated that introducing proper regulatory measures in the country’s ‘Wild West’ cryptocurrency market will help it become a “global center for crypto-assets”. The lawmakers said that currently investors are devoid of any protection or formal recourse to claim any sort of loss compensation.

The Committee in its report also stated that just ‘feeble warnings’ from the government and regulators were no longer sustainable. Thus a minimum regulation addressing anti-money laundering norms and consumer protections should be introduced as a basic minimum requirement.

Last year in December 2017 when the cryptocurrency market was surging new highs, the UK Treasury has pitched the proposal for introducing regulation in the crypto market and prevent illicit activities.

he report also stated several other issues like hacking concerns, volatile prices, among other problems to be addressed. The lawmakers said that they would want that U.K’s top financial regulator - Financial Conduct Authority (FCA), to be given more authority.

Treasury Committee chair Nicky Morgan said: “Bitcoin and other crypto-assets exist in the Wild West industry of crypto-assets. This unregulated industry leaves investors facing numerous risks. 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 further added that “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.”

The Treasury Committee also asked the government to decide whether the growth of the crypto-industry should be promoted further. The committee argued that introducing regulation could also fetch positive outcomes like increased liquidity in the digital currency market.

Nicky Morgan said: “If the government decides that crypto-asset growth should be encouraged, appropriate and proportionate regulation could see the UK become a global center for this activity.”

The report also talks about how ICO organizers can exploit the loopholes currently in the absence of regulatory involvement. It states: "Apart from drawing attention to the risks, there is little the FCA can do to protect individuals from being defrauded or losing their money. This is because most ICOs do not promise financial returns, but instead offer future access to a service or utility, meaning they fall outside the regulatory perimeter.”

The lawmakers further added: "While there may be no explicit promise of financial returns, investors in ICOs clearly expect them: they are not buying tokens to gain access to as-yet unbuilt theme parks, or to obtain dental services in years to come, but in the hope of selling them at a profit. The development of ICOs has exposed a regulatory loophole that is being exploited to the detriment of ordinary investors.”

The report, however, admits that cryptocurrencies don’t post any threat to the financial stability, considering that it is still a very small market.