UK parliamentarians sitting on the Treasury select committee have issued a report claiming that cryptocurrencies are living in a “wild west” industry according to a report. The committee says that the unregulated industry is failing at protecting the customers. Furthermore, it facilitates money laundering and that the government is being left unable to take any actions.
According to the report, the key issues with crypto are the volatile prices, barely any consumer protection, a high risk of becoming a victim of a cyber attack, and money laundering. The committee also added that none of the cryptocurrencies currently on offer are well-functioning and therefore they should be referred to as “crypto assets”
“Bitcoin and other crypto-assets exist in the wild west industry of crypto-assets. This unregulated industry leaves investors facing numerous risks,” said MP Nicky Morgan.
The committee also elaborated that given the current system the potential gains from speculating on crypto were high but due to volatility, the potential losses were also large. It added that the Financial Conduct Authority (FCA), the City regulator should have a formal mechanism to compensate consumers and consumer redress standards.
FCA on its behalf said: “The FCA agrees with the committee’s conclusion that bitcoin and similar crypto-assets are ill-suited to retail investors, and as we have warned in the past, investors in this type of crypto-asset should be prepared to lose all their money.”
Why it is important
- In February, CryptoUK was set up as a self regulated body to watch over the cryptocurrency industry. It openly welcomes the report from the Treasury Committee
- Another recently found body, the Cryptoassets Task force that set up earlier this year and is part of the FinTech Sector Strategy will look into how to deal with the issues outlined by the report.
- Earlier it was reported that the UK government has set out to create a more favorable environment for blockchain-startups in the country. Also, the UK Ministry of Justice wants to use the distributed ledger technology to improve the performance of its judicial system.