Members of the UK House of Parliament have warned that a gap in the country’s financial regulatory framework risks exposing investors to hefty losses and asset theft due to hacks amongst “a litany of risks” under current crypto market conditions which they described as “Wild West”.
Speaking recently, the Commons Treasury select committee urged the government to institute effective regulation to insulate investors from risk, reduce money laundering and turn the UK into a “global centre” for the cryptocurrency industry.
Expanded FCA Remit
To this end, the committee recommended that the Financial Conduct Authority (FCA) should be given oversight over the crypto finance and blockchain sector “as a matter of urgency”, expanding existing regulation to include cryptocurrency instead of creating a new framework from scratch in the interest of speed.
Committee chair Nicky Morgan said at the hearing:
It’s unsustainable for the government and regulators to bumble along issuing feeble warnings to potential investors, yet refrain from acting.
According to them, the impact of regulation on the sector could lead to a less volatile market and increased liquidity. Existing EU anti-money laundering (AML) and know-your-customer (KYC) regulations were also recommended for expedited introduction on the part of the government, with their key benefit being the ability to curb money laundering and terrorism financing.
Post-Brexit Crypto Regulations
According to the report, in the event of a hard Brexit with no transition period, the government should make it a priority to replicate EU rules in UK law as quickly as possible following the March 31 deadline to exit the EU. In the interim, the report said, consultation on the regulations should be brought forward.
The MPs also recommended enhanced legal backing for the FCA in order to enable it to regulate crypto exchange platform advertising and ICO companies or promoters.
The report comes a few months after a pioneering parlay between the UK crypto industry and members of the committee earlier in the year. In May, CryptoGlobe reported that Crypto UK - the body that represents the UK’s leading cryptocurrency platforms - met with the Commons Treasury select committee to drum up support for the nascent industry and help give it legitimacy.