A group of UK lawmakers believe that Bitcoin (BTC) and other cryptocurrencies need stricter regulation, as they expose investors to numerous risks, The Guardian has reported.
According to the newspaper, the Treasury select committee issued a report, urging regulators to address those issues and ensure greater protection for consumers from the “unregulated” cryptocurrency industry.
“Bitcoin and other crypto-assets exist in the wild west industry of crypto-assets. This unregulated industry leaves investors facing numerous risks,” the Conservative MP Nicky Morgan, who is also chair of the committee, said, as quoted by The Guardian. “Given the high price volatility, the hacking vulnerability of exchanges and the potential role in money laundering, the Treasury committee strongly believes that regulation should be introduced.”
In its report, the committee said that the, at the very least, consumer protection and anti-money laundering measures should be introduced. The report also highlighted the high price volatility associated with digital currencies, warning that this makes the nascent asset class a risky investment that can lead to steep losses. This assessment prompted a response from the UK’s financial regulator, the Financial Conduct Authority (FCA).
“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,” the watchdog said.
As noted by The Guardian, the FCA does not regulate Bitcoin and its crypto peers and there are no formal mechanisms for consumer redress or investor compensation. This is especially worrying given the fact that cryptocurrency exchanges are exposed to increased risk of cyberattacks that could result in consumers losing their holdings.
However, the committee also said that if the industry received a proper oversight and regulation, it could be an opportunity for the UK.