Time is running out to regulate the crypto industry before more consumers are put at risk and the UK becomes uncompetitive, MPs have warned.
The government has just 12-18 months to introduce fresh crypto rules before being “left behind” as businesses look to set up and grow elsewhere, according to a report by the All Party Parliamentary Group (APPG) for Crypto and Digital Assets.
“Other jurisdictions are making significant headway in delivering legal and regulatory certainty and there is a real risk of the UK being left behind by more advanced and more cryptocurrency and digital asset friendly regulated markets overseas,” the report said.
“The Government must move within a finite window of opportunity within the next 12-18 months to ensure early leadership within this sector.”
The report comes at a turbulent time for the UK crypto industry, with a number of banks blocking customers from transacting with crypto firms and trading platforms such as OKX snubbing London to set up a European hub in Paris. The government’s City minister, Andrew Griffith, has said the UK is committed to becoming a world crypto hub.
Crypto firms have also warned of regulatory issues in the UK, with mixed approaches to seeking to resolve them. Bosses of the world’s largest crypto exchange, Binance, embarked on a charm offensive to help secure operating licences from the UK’s financial watchdog, while the founders of London-based fintech Revolut, which offers crypto trading on its app, accused British regulators of creating “not the business environment to operate in the modern world”.
One in ten UK adults hold or have held some type of cryptocurrency or digital asset, according to research from HMRC published last year, while 78% of UK adults have heard of cryptocurrencies and more people now considering them as an alternative to mainstream investments, according to research by the Financial Conduct Authority.
While the APPG found that crypto crime was low as a proportion of total transactions, the presence of online scams remained rife, and the FCA research also found that “the level of understanding of cryptocurrencies is declining, suggesting that some users may not fully understand what they are buying,” thereby exposing them to greater risk of falling victim to dodgy crypto schemes.
Earlier today online news site Bitcoin Magazine, which claims to be “The most trusted voice in Bitcoin,” sounded the alarm to readers that the Twitter account of its editor, Pete Rizzo, “has been hacked and is being used to shill crypto scams.”
Richard Cannon, Partner at Stokoe Partnership Solicitors, said: “With the rapid growth of the crypto and digital assets sector, it is crucial that more stringent regulation is brought in to mitigate the dangers of fraud and financial crime.
“Speed is of the essence with this regulation, as the UK must act fast to ensure that it delivers comprehensive, world-leading regulation that establishes the UK as a leader in crypto regulation and cements its position as finance and technology hub.”
The report comes in stark contrast to the UK’s Treasury Committee, who last month snubbed crypto activity as akin to gambling and said any tangible benefits of the industry to the UK “remained unclear.”
“With no intrinsic value, huge price volatility and no discernible social good, consumer trading of cryptocurrencies like Bitcoin more closely resembles gambling than a financial service, and should be regulated as such,” said Harriett Baldwin MP, Chair of the Treasury Committee.
