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.
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.com, 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.”
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.
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Last modified: May 20, 2020 2:33 PM UTC