The UK’s Treasury Committee has published a unanimously-agreed report, calling for more regulation of the ‘wild west’ crypto-asset market.
UK MPs sitting in the Treasury Committee made a unanimous decision on the cryptocurrency market, calling for more oversight and regulation of the industry.
Crypto-assets are ‘especially risky’
According to their report, crypto-assets including ICOs are not within the scope of FCA (Financial Conduct Authority) regulation, meaning that investors in the industry are accorded very little protection from the risks involved.
Arguing that cryptocurrencies are ‘especially risky’ because of vulnerability to manipulation, the report stated that there’s a need to introduce regulation to the cryptocurrency space and that it is something that should be treated as a matter of urgency.
The report comes about seven months after the Treasury Committee announced that it would look into the risks and benefits of cryptocurrencies and blockchain technology and provide the best way forward when it comes to the regulation of the industry.
Proposal to give more authority to the Financial Conduct Authority
The group of lawmakers proposed to give the top financial regulator in the country, FCA, more authority in regulating the crypto market. According to the report, organisers of ICOs currently exploit loopholes in order to elude scrutiny from the financial agency. The report stated:
Apart from drawing attention to the risks, there is little the FCA can do to protect individuals from being defrauded or losing their money. This is because most ICOs do not promise financial returns, but instead offer future access to a service or utility, meaning they fall outside the regulatory perimeter,
The report continues:
While there may be no explicit promise of financial returns, investors in ICOs clearly expect them: they are not buying tokens to gain access to as-yet inbuilt theme parks, or to obtain dental services in years to come, but in the hope of selling them at a profit. The development of ICOs has exposed a regulatory loophole that is being exploited to the detriment of ordinary investors.
Cryptocurrencies aren’t a threat to financial stability
The report mentioned the speculative interest in crypto-assets, noting that ‘in the absence of any market fundamentals, their prices fluctuate according to sentiment.’
Further, the lawmakers argued that cryptocurrencies don’t pose any threat to financial stability. They also stated that crypto-assets such as Bitcoin and blockchain can be used positively, provided the industry is regulated appropriately. The report further concludes:
If the government decides that growth is to be encouraged, the committee believes that the introduction of regulation could lead to positive outcomes for the crypto-asset market.