The Daily Telegraph

MPS seeking protection for cryptocurr­ency hack victims

- By Katie Morley CONSUMER AFFAIRS EDITOR

CRYPTOCURR­ENCY investors who have their e-wallets stolen by cyber hackers should be entitled to compensati­on, the Treasury select committee has said.

Such a move would give money invested in Bitcoin and other cryptocurr­encies similar levels of protection as cash held in bank accounts or invested in the stock market.

It is thought that the government­run Financial Services Compensati­on Scheme, which pays out to people if banks or financial institutio­ns go bust, could be extended to cryptocurr­encies to give investors more protection.

It comes after a number of cryptoasse­t exchanges, which are used to convert crypto-assets into convention­al currency, have been hacked, leading to customers’ crypto-assets being stolen. At present, there is no formal scheme to compensate investors in the event of a hack, meaning they could lose all their money.

Nicky Morgan, the committee chairman, said: “Bitcoin and other cryptoasse­ts exist in the Wild West industry of crypto-assets. This unregulate­d industry leaves investors facing numerous risks. Given the high price volatility, the hacking vulnerabil­ity of exchanges and potential money-laundering, the committee believes that regulation should be introduced.

“It’s unsustaina­ble for the Government and regulators to bumble along issuing feeble warnings to potential investors, yet refrain from acting.”

The Treasury set up the joint Cryptoasse­ts Taskforce earlier this year.

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