The UK’s leading cryptocurrency platforms have called on the Treasury Select Committee to support proposals to regulate the industry.

CryptoUK, the self-regulatory body set up to represent the sector, has set out new plans for HM Treasury to make cryptocurrency investment a regulated activity under the Financial Conduct Authority (FCA).

The plans are part of a written response to the Treasury Select Committee’s inquiry into digital currencies, which is currently underway in Parliament.

CryptoUK’s blueprint stated:

• Regulation should focus on those platforms that are facilitating the interaction between digital currencies and fiat - exchanges, brokers and trading platforms - not on the currencies themselves.
• HM Treasury should use powers to grant the FCA new permissions to govern crypto investment – this can be delivered without the need for primary legislation.
• FCA should issue crypto-licenses for approved platforms and enforce new requirements including appropriateness checks on investors, anti-money laundering rules and operational standards.

Iqbal V Gandham, chair of CryptoUK, argued that introducing a requirement for the FCA to regulate the ‘on-off’ ramps between crypto and fiat currencies is well within the remit of HM Treasury, adding that this could be achieved relatively easily and would reduce consumer risk.

“This is an approach which is already working well in other countries, who are now taking the lead over the UK, for example in Japan and Gibraltar,” he explained. “We hope that the Treasury Select Committee considers these and adopts the ideas when it puts forward its own recommendations to the Treasury.”

The select committee launched its inquiry in February, with chair Nick Morgan stating that people are becoming increasingly aware of cryptocurrencies such as Bitcoin, but they may not be aware that they are currently unregulated in the UK, and that there is no protection for individual investors.

“The distributed ledger technology that supports digital currencies is said to have significant transformative potential, not least within the financial services sector,” she commented. “Striking the right balance between regulating digital currencies to provide adequate protection for consumers and businesses, whilst not stifling innovation, is crucial.”

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