Treasury presses for FCA to regulate cryptocurrencies to protect consumers
The UK government has said it stands ready to empower Britain’s financial regulator to oversee all cryptocurrency assets, after a warning from MPs that bitcoin and other cryptocurrencies were “wild west” assets that exposed consumers to a host of risks.
While some crypto-assets are regulated by the Financial Conduct Authority (FCA), many others, such as bitcoin, are not, the Treasury noted in its response to a report from the Treasury select committee published in September, which called for regulation to protect investors and prevent money laundering.
John Glen, the economic secretary to the Treasury and City minister, wrote: “The government will consult early next year to explore whether other crypto-assets that have comparable features to specified investments but that fall outside the current perimeter should be captured in regulation.”
He said the government had asked the financial regulator to consider taking on the role of supervising companies in the areas of money laundering and terrorist financing. He added that the government also believed “benefits could potentially develop in the future through the use of initial coin offerings as a capital raising tool”.
FCA regulation would ensure there are formal mechanisms for consumer redress or investor compensation. The committee has said the UK could become a global centre for cryptocurrencies if those protections were introduced.
The price of bitcoin, the best-known cryptocurrency, soared more than 900% last year to a peak of almost $20,000 (£15,800) in December, but has since fallen back to $4,066 (£3,205).
The FCA is considering a ban on the sale to consumers of derivatives based on cryptocurrencies such as bitcoin, with a consultation to close at the end of the year.
Nicky Morgan, who chairs the committee, said: “It is clear that the government and the FCA share the committee’s concerns on crypto-assets, including the lack of regulation, minimal consumer protection and anonymity aiding money laundering … The committee will keep a close eye on these consultations and will continue to press for regulation.”
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