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UK government backs more cryptocurrencies regulation following “Wild West” claims

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The British government says that it is prepared to bestow full cryptocurrency regulation rights on to the Financial Conduct Authority (FCA) after a group of Members of Parliament claimed that the cryptocurrency sphere looked like the “Wild West” in terms of consumer protection.

In a report from the Treasury Select Committee, MPs claimed that “problems include volatile prices, hacking vulnerabilities, minimal consumer protection, and anonymity aiding money laundering” all existed.

At the moment, only a handful of blockchain-related cryptocurrencies are overseen by the FCA. Bitcoin, as well as some other high profile ones, are not.

Regulation, the report claimed, could have a real positive impact for investors. Under the plans, traders who feel they have been subject to crypto fraud would find it easier to have their problems solved through a centralised system with a clear pathway.

“Regulation could improve customer outcomes, enable sustainable growth, and reduce certain risks”, it said.

“In deciding the regulatory approach, Government should decide if growth should be encouraged. Proportionate regulation could see UK as well placed to become [a] global centre for crypto-assets”, it added.

It pointed out that there was currently a lack of widespread understanding as to who was responsible for regulating what in the crypto sector – and that this could not last.

“The ambiguity of the UK Government and regulators’ position is clearly not sustainable”, it said.

However, the report did look at some positives. It touched, for example, on the role of blockchain mines, and attempted to see some positive potential value.

“Blockchain is currently slow, costly and energy-intensive, but there is potential for data storage uses”, it wrote.

The Treasury Select Committee is made up of a group of MPs drawn from various political parties.

Its role is to oversee the policy, spending and overall running of various finance-related government organisations, such as the FCA.

According to Nicky Morgan, who is Chair of the committee, there was broad agreement between the government, the FCA and the committee on how to proceed.

“The Treasury Committee would like to thank the Economic Secretary and Chief Executive of the FCA for providing evidence to the Committee’s inquiry, and for taking the time to respond to the report”, Morgan said.

“It is clear that the Government and the FCA share the Committee’s concerns on crypto-assets, including the lack of regulation, minimal consumer protection, and anonymity aiding money laundering.”

“The decision by the Government and the FCA to hold a series of consultations about how to mitigate these risks is welcome. The Committee will keep a close eye on these consultations and will continue to press for regulation”, she added.

In response, Government Minister John Glen, Minister for the City and the Economic Secretary to the Treasury, said that a government consultation was now on the way.

“The government will consult early next year to explore whether other crypto-assets that have comparable features to specified investments but that fall outside the current perimeter should be captured in regulation”, he said.