Cryptocurrency has been slowly working its way from the fringes of society to the mainstream since its inception. The publicized nature of Bitcoin gained a fair amount of traction in the press and allowed those who would otherwise be unaware of what blockchain is to learn about it. With countries such as Japan and Germany leading the way on registering blockchain cryptocurrency as legal tender, and focusing on the growth of the market, there are calls for the British government to follow suit. But should the UK government give in to mounting pressure to involve themselves with crypto regulation?
Should the UK Government Clamp Down on Crypto?
As blockchain technology and cryptocurrency is such a new concept – legislatively speaking – there are no precedents on how it should be dealt with. While many people use exchanges to sell and buy bitcoin, UK governmental policy is still fairly vague. Some people suggest that the British government firms up their stance on the crypto-assets sector, while others push the government to become a global centre for the new market. The Treasury Committee parliamentary report criticizes the government for the fact that cryptocurrency, crypto-assets, and ICOs (Initial Coin Offerings) didn’t yet fall within the FCA (Financial Conduct Authority) and therefore couldn’t be regulated to the same degree as sterling. Should blockchain cryptocurrency enter our lives in a bigger way, some state that it would be shady to not have some regulation.
Treasury Committee Concerned About Traceability
Major concerns for the Treasury Committee are defending against money-laundering and protecting consumers. The nature of cryptocurrency – including Bitcoin (BTC), Ethereum (ETH), means that the strands are able to be transferred in a more secure way, but that removes some of the ownership of the senders. Exchanges of money in this way that can go unchecked could slip into dangerous territory. With other forms of credit, there is a clear and traceable link to where money has come from and where it is going. But, the government isn’t being urged into a war on crypto. Far from it, the Treasury Committee wants the government to have a hand in how crypto-assets are managed to increase liquidity and create a legitimate business model.
Source: Pixabay Crypto regulations could mean that Britain becomes the global hub of crypto and blockchain.
Consumer Safety Cited as Incentive for Regulation
Another aspect of the crypto world where the Treasury Committee is pushing fora tightening of regulations is the one that involves consumer investment in terms of ICOs. As the currency doesn’t fall under FCA regulations, the marketing of many ICOs isn’t bound by the same scrutiny that mortgage lenders, ISAs, and the stock market may be – in that the market isn’t guaranteed to continue to rise. Some claim that the lack of regulation under the FCA means that consumers could be at risk of making financial decisions without fully understanding what they are doing.
80 per cent of the UK’s economy is based on financial services, so becoming the financial epicentre for cryptocurrency could show that the UK is determined to make a move towards the future of digital, as well as strengthening its position in the global financial market. This would be especially important after the UK finalises its break from the European Union and needs to strengthen its global position. The nature of blockchain is that it is unregulated by central banks, which provides a more stable frame of reference for the cryptocurrency. Some worry that more governmental meddling will negate the benefits of actually using cryptocurrency.