The UK Treasury Committee published a report on crypto-assets for its Digital Currencies inquiry. In the report, they seem keen on pushing a ‘Wild West’ analogy.
Time Flies…
The Digital Currencies inquiry was launched in February of this year, with a remit to “cover the role of digital currencies in the UK.” This includes the opportunities and risks to consumers, businesses, and the government that digital currencies may bring.
Further, the inquiry will look at the potential of distributed ledger technology to impact financial institutions and infrastructure. The inquiry will also examine how to balance the regulatory response, to provide protection yet not limit innovation. However, the report published today does not address either of these aspects.
Wild West
The chair of the committee, Rt. Hon. Nicky Morgan, MP, comments:
Bitcoin and other crypto-assets exist in the Wild West industry of crypto-assets. This unregulated industry leaves investors facing numerous risks.
These risks are volatile prices, hacking vulnerabilities, minimal consumer protection, and anonymity aiding money-laundering. The report also correctly states that crypto-assets and ICOs are not currently within the scope of the Financial Services Authority (FCA).
The committee believes that there are no well-functioning crypto-currencies, insisting on calling them crypto-assets.
Wild Wild West
The committee finds that the “ambiguity of the UK Government and regulators’ position is clearly not sustainable.” The report states:
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 report concludes that, as a minimum, regulations should cover consumer protection and anti-money-laundering (AML).
Gunslingers
The report then seems to pass the buck to the government and regulators, who according to the report, should:
evaluate the risks of crypto-assets, and assess whether their growth should be encouraged.
Good news if the government does want to encourage growth, and agrees with the committee that there is…
Regulation needed for “Wild West” crypto-asset market.
Because…
If the UK develops a proportionate regulatory environment for crypto-assets, the UK could be well placed to become a global centre for this activity.
Deja Vu
The UK has promoted London as a promising FinTech hub for years. The digital sandbox and soft approach to regulation and was to encourage blockchain innovation around the silicon roundabout. What exactly has the committee achieved in the last seven months?
Self-regulatory group CryptoUK formed just before the Digital Currencies inquiry began. They have been promoting a proportionate regulatory environment since then — without any mention of the ‘Wild West’.
For their part, they respectfully welcomed the findings of the Treasury committee. Chair, Iqbal Gandham said:
As an industry we have been calling for the introduction of proportionate regulation to improve standards and encourage growth.
It’s amazing they had the patience to refrain from facepalming.
What are your thoughts on the Digital Currencies inquiry? What about the ‘Wild West’ analogy?
Images courtesy of Bitcoinist archives, Shutterstock.