Cryptocurrency platforms in the UK are asking the government to provide regulatory oversight. Under the aegis of CryptoUK, the trade group is asking a Treasury Committee looking into cryptocurrencies to place the sector under the oversight of the Financial Conduct Authority (FCA).
In its proposals, the association is rooting for a crypto license to be issued to exchanges and other players in the cryptocurrency market. CryptoUK is of the view that the license should only be issued to exchanges implementing AML and KYC policies.
Lack of regulation is impeding the advancement of bitcoin and other cryptocurrencies, it says. The lack of progress has long been seen as an issue preventing the advancement of the market necessary for the entry of institutional investors. Licensing can bring in this largely untapped market and provide much needed liquidity needed to rein in on the high volatility.
“Introducing a requirement for the FCA to regulate the ‘on-off’ ramps between crypto and fiat currencies is well within the remit of HM Treasury. Based on our analysis, this could be achieved relatively easily, without the need for primary legislation, and would have a huge impact, both in reducing consumer risk and improving industry standards, eToro director and CryptoUK chairman Iqbal Gandham told CityAM.
Regulate Only Service Providers
Emphasis should, however, be placed on third parties facilitating transactions rather on cryptocurrencies, Gandham said. He drew on the examples of Japan and Gibraltar.
“This is a wonderful opportunity for government to take a proactive stance, putting action where there are positive words and reinforcing the UK’s role as the world’s financial capital.
Prices have swung dangerously for the better part of this year amid regulatory uncertainty. There has been some positive activity over the last three weeks although it’s is not clear how long this will last.
The parliamentary committee is conducting the inquiry as it looks at how to implement new EU anti-money laundering regulations. It, therefore, has a very influential role as to what direction regulation of the industry takes in the UK.
The committee is also looking at the impact of cryptocurrencies on the economy. Bank of England governor Mark Carney has previously stated that the sector does not pose any threat to the economy. In his report to the G20 summit in Argentina, Carney said cryptocurrencies only accounted for 1% of the global GDP.