UK MPs call for Regulations on ‘Wild West’ Crypto Market

  • Commons Treasury select committee warns of “litany of risks” to consumers under current “Wild West” market conditions
  • MPs propose expansion of Financial Conduct Authority’s remit to cover crypto trading and duplication of existing European crypto regulations in the event of hard Brexit.

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.

UK's Regulator Warns Against Fraudulent Firm Cloning Financial Giant TP ICAP

The UK’s financial regulator, the Financial Conduct Authority (FCA), has uncovered another allegedly fraudulent crypto-related scheme.

On Friday (May 24, 2019), the FCA revealed that a company called ICAP Crypto had been impersonating an established firm known as ICAP Europe Limited. ICAP Crypto reportedly attempted to lure unsuspecting investors into a potential scam involving cryptocurrencies.

Using Company Details Belonging to Legitimate Financial Firms

While ICAP Crypto’s management does not claim its services are regulated by the FCA, the allegedly fraudulent firm has been using the company details that belong to legitimate UK-registered financial service providers.

The FCA has warned that the potential scammers operating ICAP Crypto may be using the company license information of established firms in order to lure investors into investing into a fraudulent crypto scheme.

According to the FCA, ICAP Crypto has provided contact information which may be “mixed” with details that belong to TP ICAP, one of the largest global interdealer brokers. Moreover, the FCA cautioned users that ICAP Crypto has launched a website that is not licensed by the FCA to offer financial services.

No Details Regarding Crypto Services

There’s also no association between the management and services provided by TP ICAP and ICAP Crypto, the UK’s financial regulator clarified. Furthermore, the FCA’s investigation has revealed that ICAP Crypto appears to be offering various crypto-related services including a platform to launch initial coin offerings (ICOs).

Although ICAP Crypto seems to be offering several different cryptocurrency-related products, the FCA found that the allegedly fraudulent firm has not provided any specific details regarding its services.

ICAP Crypto’s management states that its services include “a sophisticated blend of engineering with experience to empower thousands of marketers to access markets around the world through the use of digital currency entirely outside the traditional financial system.” However, it remains unclear what type of services the company actually offers.

FCA Planning To Draft Comprehensive Crypto Regulations

In January 2019, the UK’s financial regulator called for increased regulatory oversight over the leading European nation’s cryptocurrency market. In order to create regulations for digital assets, the FCA launched a consultation which requested feedback regarding how to regulate crypto transactions.

The FCA had specifically asked for feedback on how to regulate crypto exchanges, digital asset payment processing services, wallet providers, and broker dealers offering crypto derivatives.