“Wild West” Crypto Market Should Be Regulated, Says UK Treasury Committeebr>
The UK Parliament’s Treasury Committee said that regulation is needed for the “Wild West” domestic cryptocurrecny market.
In a report published on Wednesday, the Treasury Committee said that cryptocurrencies are a “Wild West industry” and need to be regulated to protect investors. The report called for the government to address the issues of poor security from hackers, volatile price swings, and anonymity that can aid crime.
“Bitcoin and other crypto-assets exist in the Wild West industry of crypto-assets,” said Treasury Committee chair Nicky Morgan. “This unregulated industry leaves investors facing numerous risks. Given the high price volatility, the hacking vulnerability of exchanges and the potential role in money laundering, the Treasury Committee strongly believes that regulation should be introduced.”
The committee urged the government and regulators to evaluate the risks of crypto-assets, and assess whether their growth should be encouraged. If growth is favoured, the report said that regulation could lead to positive outcomes for the crypto-asset market, including the move toward a more mature business model and increased liquidity.
“The advertisements of both ICO issuers and crypto-asset exchanges are not regulated by the FCA. One-sided adverts imply that the crypto-asset market will only go up, and that anyone can make a lot of money easily,” the report said. “The FCA’s consumer warnings are a feeble corrective to such misleading adverts. The regulator needs more power to control how crypto-asset exchanges and ICOs market their services.”
Morgan said that it’s unsustainable for the government and regulators to bumble along issuing feeble warnings to potential investors, yet refrain from acting.
“At a minimum, regulation should address consumer protection and anti-money laundering,” Morgan said. “If the government decides that crypto-asset growth should be encouraged, appropriate and proportionate regulation could see the UK become a global center for this activity.”
The EU’s Fifth AML Directive was passed by the parliament in June of this year. The directive requires crypto exchanges to comply with AML regulations to prevent risks associated with the use of virtual currencies for terrorist financing and to ensure increased transparency of financial transactions.
However, the government’s consultation on transposing the EU’s Fifth AML Directive into UK regulation is not expected to finish until the end of 2019. The Treasury Committee said that the government should prioritize and expedite the transposition.