New BBFA, Novum Insights and TodaQ Report Sounds Alarm over Bad Crypto Regulations in UK
Businesses and analysts in the UK have hit back at plans by the government to regulate crypto and the related technology. They described them as a blunt, according to a report in the Telegraph on October 29, 2018.
In the Name of Consumer Protection
There have been calls by various players to step up the level of power that the financial regulator has over crypto. It was reported in September that the focus would be AML and consumer protection.
The calls for more regulation came from the UK Treasury Committee. The aim was to protect investors according to them. The committee of MPs in the House of Commons wanted various issued resolved around crypto. For instance, they wanted poor consumer protection, price volatility, money laundering, and the risk of hacker attacks addressed.
The committee also urged the financial regulator to supervise crypto. Right now, the regulator does not have any legal backing to regulate cryptocurrency exchanges or issuers of digital assets. According to the chair of the committee, it is not sustainable for the regulator and the government to issue feeble warnings to investors and fail to act. The chair added that at the very least, the regulator should address AML and consumer protection.
CryptoUK, which is a self-regulatory association, noted via their chair that regulatory oversight was important for consumer safety. This would also help to offer clarity to the industry. TCryptoUK addressed the Treasury Committee in May to advocate for favorable regulation.
At the time, CryptoUK said that HM Treasury needed to impart new competencies upon the regulatory authority. This would allow it to control investment in crypto. The organization said that regulation should be directed toward brokers and exchanges rather than crypto itself.
Warning of Bad Regulation
According to a recent joint report by businesses and crypto experts, they are urging caution against far-reaching regulation that might harm the industry. According to the report, bad regulation was worse than not having any regulation. This could lead to a knock-on effect on the entire fintech sector of the UK.
The chief executive of the British Business Federation Authority (BBFA), Patrick Curry said that the regulation was a blunt instrument approach. He added that he had not seen such kind of regulation in other nations that had embraced crypto.
Mr. Curry added that the use of crypto and the associated technology was still a voyage of discovery. The technology was still being refined for various use cases. Thus, his main concern was the law of unintended consequences.
According to a Telegraph, the UK had thus far been slow to understand its domestic crypto ecosystem. This is despite London being home to some of the most popular names in the crypto world such as the Bitstamp exchange and the eToro trading platform.
In March, the financial regulator established a crypto task force that wants to assess what to do about crypto. The chair of the regulatory body said that crypto had potential to cause harm to consumers unless it was regulated.