The UK Treasury Select Committee’s conclusion that crypto-assets should be regulated demonstrates cryptocurrencies are part of mainstream finance and the sector is likely to rally as a result. So says Nigel Green, Founder and CEO of deVere Group, which launched the exchange app deVere Crypto earlier this year.
The UK Treasury Committee has labelled Bitcoin and other cryptocurrencies a “Wild West industry”. A report for its Digital Currencies Inquiry states that the “ambiguity of the UK government and regulators’ position is clearly not sustainable.”
Proactive and progressive approach
Green comments: “Cryptocurrencies are here to stay. In fact, in today’s increasingly digitalised, globalised world, demand for these digital, global currencies is only set to soar in the coming years. As such, I welcome the Treasury Select Committee’s proactive and progressive approach, which could be the first step to providing regulations to protect consumers and prevent illicit activity.”
The conclusion made by the Committee about cryptocurrencies puts them on the right side of history, Green argues. “As I have said previously, regulation of the crypto sector is now I believe inevitable. Regulation of cryptocurrencies will give investors even more protection and, therefore, confidence in the burgeoning market is likely to drive prices higher – and today’s signal from the Treasury Select Committee could have the same effect.”
The Digital Currencies Inquiry follows the Financial Stability Board (FSB), the international watchdog chaired by Bank of England Governor, Mark Carney, releasing a report in the summer that concluded Bitcoin and cryptocurrencies do not pose a risk to the global financial system.
Japan’s financial regulator, the Financial Services Agency (FSA), recently said it would like the cryptocurrency industry to grow “under appropriate regulation”.
In an interview with Reuters, FSA Commissioner Toshihide Endo claimed the regulator had no intention to curb the space excessively. Instead, it is trying to strike a balance between protecting consumers and promoting technological innovation.
Last year, Japan became the first country to regulate cryptocurrency exchanges. The FSA started clamping down on the industry following the $530 million (£411.5 million) theft of digital money from Tokyo-based Coincheck in January.
A series of FSA inspections uncovered poor management and a lack of basic internal controls at several exchanges. As a result, some exchanges were ordered to temporarily suspend operations.
The FSA is also thought to be refining its regulatory framework around cryptocurrency exchanges in order to boost consumer protection and better secure investor assets. It considers the current consumer protection mechanisms afford by the Payment Services Act to be insufficient, according to local publication Sankei.
The review could see crypto exchanges being brought into the realm of Japan’s Financial Instruments and Exchange Act, which requires traditional securities firms and stock brokerages to manage customer funds and securities separately from corporate assets. This shift could result in cryptocurrencies being classified as a financial product, giving them exposure to mainstream financial markets.