A newly-proposed plan by British MPs to regulate the digital assets space has aroused criticism by experts. UK analysts and businesses have hit back at the proposed changes to regulate blockchain technology and cryptocurrencies, claiming the plans are “ashamedly geared around Bitcoin”.
A joint report by British Business Federation Authority (BBFA), TodaQ cryptocurrency exchange, and the venture capital fund Novum Insights has urged caution, warning that “bad regulation is worse than no regulation at all”.
“It is a very blunt instrument approach and I haven’t seen this in other countries,” said Patrick Curry, chief executive of the BBFA, for the Telegraph. “The use of this technology is still a voyage of discovery and these technologies are being refined for different types of use. My concern is the law of unintended consequences.”
Curry warned that the proposed legislation could potentially force UK crypto exchanges to move out of the country, ruining Britain’s position as a leader in fintech innovations. He was joined by Neil Foster, corporate technology partner at Baker Botts, who criticized the texts of the legislation for lumping together stocks, bonds, shares and other products together under the vague term “crypto assets”.
“With sophisticated classification we should work out what could be a regulated activity,” said Mr. Foster. “If you crowbar everything into the Regulated Activities Order you are making everything into an investment bank.”
The End of the “Laissez-Faire” Approach
The United Kingdom has been one of the leading hubs for fintech innovation, with some of the best-established names in the industry being headquartered in London. In August, the British Financial Conduct Authority (FCA) launched a light-regulatory ‘global sandbox’ for financial technology industry (FinTech) in an effort to create a platform for testing innovative cross-border ideas.
However, the British government has been heavily criticized for its passive approach towards crypto regulations. In September, the UK treasury committee called for the ‘Wild West industry’ to be heavily regulated in order to protect investors and deter scammers.
“It's unsustainable for the government and regulators to bumble along issuing feeble warnings to potential investors, yet refrain from acting,” said Conservative MP Nicky Morgan for the BBC at the time. “At a minimum, regulation should address consumer protection and anti-money-laundering.”