Britain’s cryptocurrency market resembles the Wild West and should be regulated, say lawmakers who are urging the government to bring an end to ‘volatile price swings, vulnerability to hacking and weak consumer protection’.
The Parliament’s Treasury Committee said in a unanimous report that the ambiguity of the UK government and regulators’ position is ‘clearly not sustainable’.
With proportionate regulation, Britain could “improve customer outcomes, enable sustainable growth, and reduce certain risks”, it said, becoming a world-leader in cryptocurrency markets.
“It’s unsustainable for the government and regulators to bumble along issuing feeble warnings to potential investors, yet refrain from acting,” said Nicky Morgan, the committee’s chair.
Referring to them as “crypto-assets”, the committee said: “Crypto-asset investors are currently afforded very little protection from the litany of risks. Namely, there are no formal mechanisms for consumer redress, nor compensation.
“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.”
Extending existing laws to cover cryptocurrency exchanges and initial coin offerings would be the quickest way to give regulators oversight of the industry, the report said.
Industry body CryptoUK, the first self-regulatory trade association for the UK cryptocurrency industry, welcomed the recommendations.
The government should “introduce regulation that strikes the right balance between establishing safeguards and enabling the UK to become the global leader in crypto”, said Iqbal Gandham, its chair.
The report suggested that the voluntary self-regulating bodies which set out a code of conduct for the market were insufficient, and that some firms will inevitably ignore them.
“At a minimum, regulation should address consumer protection and anti-money laundering,” added Morgan.
“If the government decides that crypto-asset growth should be encouraged, appropriate and proportionate regulation could see the UK become a global centre for this activity.”