The parliamentary report published by the UK Treasury Committee has advocated for regulation of the “wild west” crypto-assets sector. The report criticizes the “ambiguity” of the current stance of UK regulators, arguing that with effective regulations, the United Kingdom could become a “global center” for the emerging cryptocurrency sector.
Treasury Committee Criticizes UK Regulators’ “Unsustainable” Crypto Stance
The recent UK parliamentary report into cryptocurrencies has found the current “ambiguity of the UK Government and regulators’ position [regarding crypto-assets] is clearly not sustainable.”
The report states that “Crypto-assets, and most Initial Coin Offerings (ICO), are currently not within the scope of Financial Conduct Authority (FCA) regulation,” and as such, “Crypto-asset investors are currently afforded very little protection from the litany of risks, namely there are no formal mechanisms for consumer redress, nor compensation.”
The Treasury Committee advocates “strongly” that “regulation should be introduced,” proposing, “At a minimum, regulation…address[ing] consumer protection and Anti-Money Laundering (AML).”
U.K. Has Potential to Become “Global Center” for Crypto-Assets
The report asserts that “In deciding the regulatory approach, the Government and regulators should evaluate the risks of crypto-assets, and assess whether their growth should be encouraged.”
“If growth is favored,” the Committee continues, “regulation could lead to positive outcomes for the crypto-asset market, including the move toward a more mature business model and increased liquidity.”
The report emphasizes that “If the UK develops a proportionate regulatory environment for crypto-assets, the UK could be well placed to become a global center for this activity.”
“Consumer Warnings” Comprise “Feeble Corrective” to Misleading ICO Adverts
The parliamentary report also argues that the United Kingdom Financial Conduct Authority (FCA) has insufficiently responded to “misleading adverts” for initial coin offerings (ICOs).
The Committee asserts that “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 describes “The FCA’s consumer warnings” as comprising “a feeble corrective to such misleading adverts,” concluding that “The regulator needs more power to control how crypto-asset exchanges and ICOs market their services.”
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