A United Kingdom cryptoasset taskforce has published a report detailing some of the opportunities and risks distributed ledger technology (DLT) and crypto assets pose, and have indicated they will take action to mitigate potential risks in the sector.
The taskforce, comprised of HM Treasury, the Financial Conduct Authority (FCA), and the Bank of England, was launched in March by Chancellor of the Exchequer Phillip Hammond.
According to the report, there was growing recognition of how DLT “has the potential to deliver substantial benefits,” but “growing evidence” crypto assets harm consumers and markets.
The idea behind the taskforce was to come up with a strategy concerning crypto assets and DLT that would help foster a governmental ambition to be “the worlds most innovative economy” while upholding a reputation of a safe and secure financial services market.
Opportunities And Risks Abound
The authors of the report wrote how the taskforce ultimately concluded to support the development of DLT due to its potential for of a variety of sectors.
Those in the taskforce are dedicated to encouraging “responsible development” of crypto asset and DLT-related activity, but concluded a few measures should be taken to tackle associated risks that fall inside of already-existing regulatory frameworks.
The report noted how the taskforce has already pledged their commitment to a few actions to curtail risk.
These include issuing guidance by the end of 2018 to clear up what crypto assets are inside of existing regulation, and carrying out a consultation by Q1 2019 to see if certain crypto asset derivatives sales to retail customers should be prohibited.
Additionally, the government of the UK will:
issue a consultation in early 2019 to further explore whether and how exchange tokens, and related firms such as exchanges and wallet providers, could be regulated effectively.
Responding To A Fast-Paced Market
The taskforce also wrote how they understand the global industry for crypto assets and DLT changes constantly with new technology.
They plan to meet every six months to go over the UK’s approach to both sectors and consider new developments in the space.
Part of the strategy going forward is for the government to craft a “robust regulatory response” that will tackle crypto asset use for money laundering and other illicit activity.
According to the report, this will be addressed by a directive that goes “significantly beyond” EU requirements under the Fifth Anti-Money Laundering Directive.