CryptoUK Urges UK Government To Regulate Crypto Exchanges

News, Regulation | May 1, 2018 By:

CryptoUK, a self-regulatory body set up to represent the cryptocurrency sector, has called on the UK government to regulate the industry.

In February, the United Kingdom’s Treasury Select Committee, a cross-party team of members of Parliament, launched an inquiry into cryptocurrency and blockchain in an effort to understand the technology. The Treasury Committee wants to examine the role of cryptocurrencies in the UK, including the risks they pose to consumers, business, and the government. They will also examine the potential impact of blockchain technology on financial institutions, including the Bank of England, and financial infrastructure.

In response to the inquiry, CryptoUK has set out new plans for HM Treasury to make cryptocurrency investment a regulated activity under the Financial Conduct Authority (FCA).

CryptoUK has proposed that regulation should focus on those platforms that are facilitating the interaction between cryptocurrencies and fiat – exchanges, brokers and trading platforms – not on the currencies themselves. HM Treasury should use powers to grant the FCA new permissions to govern crypto investment, which can be delivered without the need for primary legislation. The FCA should also issue “Crypto-Licenses” to approved platforms and enforce new requirements including appropriateness checks on investors, anti-money laundering (AML) rules and operational standards.

Iqbal Gandham, Chair of CryptoUK, said that introducing a requirement for the FCA to regulate the “on-off” ramps between crypto and fiat currencies is well within the remit of HM Treasury.

“This is an approach which is already working well in other countries, who are now taking the lead over the UK, for example in Japan and Gibraltar-,” Gandham said. “This is a wonderful opportunity for government to take a pro-active stance, putting action where there are positive words and reinforcing the UK’s role as the world’s financial capital.”

Gandham added that based on their analysis, this could be achieved relatively easily, without the need for primary legislation, and would have a huge impact, both in reducing consumer risk and improving industry standards.

“We hope that the Treasury Select Committee considers these and adopts the ideas when it puts forward its own recommendations to the Treasury,” Gandham said.

Formed earlier this year, CryptoUK’s primary objectives are to raise understanding of the cryptocurrency sector, improve industry standards, and engage with policy makers on the future of the sector. Founding members include BlockEx, CEX.IO, Coinbase, CoinShares, CommerceBlock, CryptoCompare, and eToro.