‘Wild West’ cryptocurrencies need regulation, U.K. report says

Lawmakers say industry rules will allow Britain to be a global centre for crypto-assets

KELVIN CHAN

British lawmakers have backed calls for greater regulation of cryptocurrencies such as bitcoin in order to bring an element of control to a market that more resembles the “Wild West.”

In a report on digital currencies published Wednesday, the Treasury Select Committee called for regulations to protect consumers and prevent money laundering. Lawmakers highlighted a rapidly emerging industry that’s been troubled by wild price swings, allegations of fraud and worries it could be used to finance criminal or terrorist activity.

Virtual currencies, also known as tokens, are electronic alternatives to traditional mon- ey. The appeal of cryptocurrencies like bitcoin lies in their use of “blockchain technology” that records all transactions in a digital database while keeping identities private, allowing users to sidestep government or banking system oversight. Speculation has also played a part in their popularity: bitcoin’s price skyrocketed late last year to more than $19,000 though it has since tumbled and is now trading at around $6,300.

In the report, the committee said the British government has taken an ambiguous position on regulation and argued that the industry’s voluntary approach is inadequate. As a result, it said investors have been left open to risks including volatile prices and hacking vulner- abilities.

“Bitcoin and other crypto-assets exist in the Wild West industry of crypto-assets,” committee chair Nicky Morgan said. “This unregulated industry leaves investors facing numerous risks.”

Morgan said the government needs to do more than “bumble along issuing feeble warnings to investors.”