Following the report issued by the UK MPs less than a month ago suggesting to regulate the “wild west” crypto industry, British Bussiness Financial Authority (BBFA) along with the Baker Bots law firm, Novum Insights venture capital fund, and TodaQ cryptocurrency exchange have presented their own report.
The document that landed in the hands of the Telegraph journalists states that MPs plan to regulate the problems of the industry such as volatile prices, lack of consumer protection, high risks of becoming a victim of a cyber attack and money laundering is concentrated around bitcoin and what's more, can end up punishing any other crypto assets.
Patrick Curry, the CEO of BBFA warned that unseemly enactment could drive crypto trading platforms out of the UK, harming the nation's remaining as a fintech center point.
The joint companies report is warning that in the heist of presenting new regulations, authorities might aggravate the situation stating that “bad regulation is worse than no regulation at all”.
“It is a very blunt instrument approach and I haven’t seen this in other countries. 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,” Patrick Curry said.
Recall that earlier in September, the British government has announced the plan to expand the powers of the Financial Conduct Authority (FCA) along with its main framework “Regulated Activities Order” to which British financial market is a subject for.
Such an order will create more problems than solutions as this decision will mix cryptocurrencies and “crypto assets” such as stocks, shares or bonds under one legislation, which is wrong to do.
“With sophisticated classification we should work out what could be a regulated activity. If you crowbar everything into the Regulated Activities Order you are making everything into an investment bank,” Neil Foster, corporate technology partner at Baker Botts said.
Currently, the United Kingdom does not regulate the cryptocurrency industry.
In August, the FCA noted that it received a rising number of complaints regarding crypto scams.
The FCA said, “the firms operating the scams are usually based outside of the UK but will claim to have a UK presence, often a prestigious City of London address.”
Last week, Stephen Hammond, the member of Parliament representing the Conservative Party joined IronX cryptocurrency exchange at the position of an adviser. Hammond was supposed to take the role of a middleman between UK authorities and the platform. However, several days later Mr. Hammond has decided to leave his new position explaining that the “committee was likely to continue examining cryptocurrencies” and this would likely create the conflict of interest.
The FCA has promised to present new legislation in the upcoming months before the new year.
“Cryptocurrencies themselves (i.e. those designed primarily as a means of payment/exchange) are not currently within our regulatory perimeter. However, some models of use or packaging cryptocurrencies bring them within our perimeter, making the landscape complex…We will work with the Bank of England and the Treasury as part of a task force to develop thinking and publish a Discussion Paper later this year outlining our policy thinking on cryptocurrencies,” the body has stated on October 18.
In March this year, Mark Carney, the Chairman of the Financial Stability Board (FSB) and being at the Governor position for the Bank of England said that “crypto-assets do not pose risks to global financial stability” at the same time Carney thinks that “one of the main reasons for their use is to shield illicit activities.”
“The time has come to hold the crypto-asset ecosystem to the same standards as the rest of the financial system,” he said back than.
Reynolds Porter, the Legal Director at British law firm Chamberlain (RPC) thinks that the preparation and introduction of cryptocurrency regulation could take several years. Kaufman explained such an extended period by the complexity of creating the regulation for totally new assets and business models. He also added that past precedents show that even minor changes to the current regulatory regime can take years.
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