British Regulators (FCA) Setting Regulatory Trends for CryptocurrencySeptember 20, 2018
The Financial Conduct Authority, the City Regulator, do not cover for crypto-assets. There are no formal redressal mechanisms that will address compensation for investors in the cryptocurrency industry.
Morgan stated, “Bitcoin and other crypto-assets exist in the wild west industry of crypto-assets. This unregulated industry leaves investors facing numerous risks,” Morgan added, “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.”
British lawmakers have therefore called on the regulation of cryptocurrencies like bitcoins. They say is an attempt to regulate the cryptocurrency market that looks a lot like the Wild West.
The Treasury Select Committee in its publication early this Wednesday called for regulations that will prevent money laundering and protect consumer interests in the cryptocurrency industry.
The cryptocurrency industry experienced rapid price swings. There were allegations of fraud accompanied by burning worries about cryptocurrency being used for funding criminal and terrorist activities.
Blockchain technology that forms the mainnet process of cryptocurrency is that which actually makes cryptocurrency appealing. This technology keeps identities private and the users who make use of this transaction process can sidestep out of the banking system and the middlemen overnight. Speculation is another aspect that made bitcoins popular.
The price of Bitcoins skyrocketed in the past year to as high as $19,000. However, the price has gone down to $6,300 now. This is indeed a very high volatility for even the robust minded investor. Ideally never a fit for the faint headed conservative investor.
The British government feels that its voluntary approach to regulating the industry is appropriate. The government also stated that investors are vulnerable to hacking and the risks of price volatility.
Nicky Morgan, the committee Chairwoman, stated, “This unregulated industry leaves investors facing numerous risks.” Morgan also added that “The government needs to do more than bumble along issuing feeble warnings to investors.”
The committee stressed on improving on the executive powers of the British Financial Authorities in regulating advertisements meant for the Initial Coin offerings. These offerings are actually useful in permitting investors to trade them or convert them to fiat currency. These offerings help the crypto exchanges raise money for the tokens.
A senior U.S. Treasury official as well expressed similar concerns during his visit to Europe.
In Paris, Marshall Billingslea, Business Analyst an assistant Treasury secretary for Terrorist Financing in the United States remarked: “The Islamic State group has used virtual currencies and published instructions on Twitter on how to move Bitcoin to recipients in Syria.”
This, he said, is “an example of a very worrisome trend-line that we see.” He also added, “It is essential that we establish a global set of standards that are applied in a uniform manner.”
Despite all, the British government still believes that there is still room for the United Kingdom to become the global arena for cryptocurrency. It is likely to take shape when the government takes a regulatory approach.