A little over a month since legislators in the United Kingdom branded the domestic cryptocurrency market the ‘Wild West’ and called
for its regulation, experts have warned that such a move could have
disastrous consequences for the fintech market in the world’s fifth
largest economy.
According to a report authored by the British Business Federation
Authority (BBFA) and cryptocurrency exchange firm TodaQ among others,
the efforts by the MPs to introduce measures that would require the
country’s financial regulator, the Financial Conduct Authority (FCA), to police the cryptocurrency sector could result in other assets such as bonds, shares and stocks being penalized too.
Initially reported by The Telegraph, the CEO of the BBFA, Patrick Curry, has also argued
that such pieces of legislation could have unintended consequences
resulting in cryptocurrency exchanges leaving the United Kingdom. This
could damage the reputation of Britain as a hub for the fintech
industry.
‘Blunt Investment Approach’
Per Curry, such laws could also hamper innovation in the cryptocurrency sector as it is still a nascent technology.
“It is a very blunt instrument approach and I haven’t seen this in
other countries,” Curry said. “The use of this technology is still a
voyage of discovery and these technologies are being refined for
different types of use. My concern is the law of unintended
consequences.”
As reported by CCN, the Treasury Committee of the British Parliament had mid last month called for the regulation of the cryptocurrency sector over concerns of minimal protections offered to investors, widespread fraud reports, cybersecurity vulnerabilities of cryptocurrency exchanges and money laundering.
While the report lead-authored by the BBFA warns of the disastrous
consequences likely to result from introducing cryptocurrency
regulations, the Treasury Committee report had argued that such a move
could even result in increasing liquidity in the sector. Additionally,
Nicky Morgan, the chairperson of the Treasury Committee, had argued that
if done right, such regulations could result in Britain becoming a
global cryptocurrency hub:
“If the government decides that crypto-asset growth should be
encouraged, appropriate and proportionate regulation could see the UK
become a global center for this activity.”
Drafting Underway
Currently, the Financial Conduct Authority, the Bank of England and Her Majesty’s Revenue and Customs (HMRC) are jointly working on a proposal for new cryptocurrency regulations.
This is not the first time that debate on cryptocurrency regulations
in the UK has drawn unfavorable opinions. Earlier this month, leading UK
law firm Reynolds Porter Chamberlain raised doubts over whether the FCA has the capacity to regulate the cryptocurrency
sector. Additionally, the firm’s legal experts warned that introducing
such regulations was a lengthy process and would take a period of up to
24 months.
