To investigate the opportunities and hazards that crypto assets present for consumers and businesses, UK Lawmakers Treasury Select Committee has opened an investigation into them.
UK Lawmakers Launch Inquiry
Today, July 13, the committee requested written evidence on digital currencies from industry stakeholders in the crypto asset sector.
The Committee will investigate the function of cryptocurrency assets in the UK as well as the advantages and disadvantages they present to customers and businesses.
The Committee is seeking written submissions of evidence that address a variety of topics, including whether traditional currencies will eventually be replaced by cryptocurrencies, the opportunities and risks that using cryptocurrencies presents for people and the economy, and how using cryptocurrencies affects social inclusion.
Additionally, UK lawmakers will look at how regulation may be balanced to protect consumers without strangling innovation.
BTC/USD plunges below $20k. Source: TradingView
Mel Stride, chair of the Treasury Committee, noted in a paper calling for evidence that crypto assets “have the potential to bring new and innovative changes to the UK financial system”. He further noted:
“However, there are also significant concerns around their use to launder funds, purchase illegal products, and evade international sanctions. In recent months, the value of most cryptoassets has fallen dramatically. As a committee, we will be investigating the opportunities and risks that crypto presents, where additional regulation may be required, and the lessons the government can learn from other countries.”
Also, responses addressing how well consumers are protected by current regulations on advertising and money laundering.
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The Committee will look into the possible effects of distributed ledger technology on financial institutions, including the Bank of England, and if regulation could help crypto-asset start-ups by bolstering consumer trust and resilience.
The approach taken by governments and authorities in other nations toward crypto-assets, as well as any lessons that the UK can take from these approaches, is something that MPs are also interested in learning about from stakeholders and experts.
More Regulation Is Expected
However, due to the current crypto winter, which saw the stablecoin Terra and sister token Luna plummet and dramatically lower crypto valuations as a result, market participants anticipate the regulator to ramp up the pace.
John Cunliffe, deputy general for financial stability at the Bank of England, said in a speech this week:
“Regulators need to get on with the job of bringing the use of crypto technologies in finance within the regulatory perimeter. To put it the other way around, the lesson we should not take from the crypto winter is that crypto is somehow over and we do not need to be concerned about it anymore.”
Due to the market instability, businesses like cryptocurrency broker Voyager Digital filed for bankruptcy, and others like Vauld halted withdrawals and Coinbase downsized staff.
The EU unveiled a groundbreaking set of regulations in June to control the “wild west” of crypto assets. It incorporated safeguards against market manipulation and misuse.
The markets in crypto assets (MiCA) law passed by the parliament is anticipated to take effect at the end of 2023.
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Featured image from Shutterstock, chart from TradingView.com