Treasury Select Committee: Regulation Needed in Crypto Industry’s “Wild West”
MPs on the U.K.’s Treasury Select Committee have said that the crypto industry is the “wild west” and that investors are left facing “numerous risks” due to the unregulated environment.
According to Conservative MP Nicky Morgan, chair of the committee, the current situation is unsustainable, reports The Guardian.
“Bitcoin and other crypto assets exist in the wild west industry of crypto assets,” Morgan said. “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.”
This announcement comes months after the crypto self-regulatory industry body CryptoUK gave evidence to the Select Committee stating that the government must regulate the sector or it risks missing out “on the biggest technology since the internet.”
In June, Iqbal V. Gandham, CryptoUK chairperson and U.K. managing director of investment platform eToro, said:
“Regulating the point where cash is converted to crypto and vice versa is a simple solution to the serious concerns currently tarnishing this technology.”
Previously CryptoUK urged U.K.’s MPs to support its proposals to have the market regulated under the U.K.’s financial watchdog, the Financial Conduct Authority (FCA).
The latest news regarding regulation of the crypto market shows that the treasury’s report states that even though gains can be realised, so too can losses. The FCA agreed with the findings, and said:
“…Bitcoin and similar crypto assets are ill-suited to retail investors, and as we have warned in the past, investors in this type of crypto-asset should be prepared to lose all their money.”
Speaking to CoinJournal, Scott Nelson, CEO of Sweetbridge, a blockchain alliance that aims to leverage the technology to enable more efficient global commerce, said that a potential solution to the lack of regulatory guidance could be seen in self-regulatory organisations (SROs). Here expertise could be drawn upon from blockchain industry experts to craft effective rules to operate responsibly in the growing industry, he argued.
“We think SROs can be a welcome addition to the landscape of regulatory responsibilities for this industry,” Nelson added. “We think in many ways that self-regulatory activity has already begun, and will continue to develop even if there is no government-recognised SRO for the industry.”
He added, though, that any power given to an SRO must be accompanied by “meaningful regulatory delegation from federal agencies.”
The Treasury Select Committee’s report comes just as the New York Attorney General’s office released a report yesterday arguing that crypto exchanges aren’t doing enough to protect consumers.
Published by Barbara Underwood, Attorney General, the report states that some crypto exchanges haven’t “implemented common standards for security, internal controls, market surveillance protocols, disclosures, or other investor and consumer protections.”