Cryptocurrency 'Wild West' must come to an end, UK lawmakers say

Key Points
  • UK lawmakers have described the local crypto-trading market as the "Wild West".
  • The Treasury Committee say the government should carry out reform to protect consumers and reduce crime.
  • The report also suggested that Britain can be a global hub for legitimate trading of crypto-assets.
Mike Segar | Reuters

U.K. lawmakers have said they want to clamp down on the "Wild West" cryptocurrency market and prepare Britain as a legitimate home for the trading of digital currencies.

The Treasury Committee released a report on Wednesday that called for the government to address the issues of poor security from hackers, volatile price swings, and anonymity that can aid crime.

A cryptocurrency is a digital record designed to work as a medium of value exchange. It uses cryptography to record and secure financial transactions. The virtual tokens that consumers buy can themselves be used to make payments.

The paper claimed that the British government currently has an ambiguous stance to the industry which is opening the door to criminal activity as well as high risk for consumers.

"As the Government and regulators decide whether the current Wild West situation is allowed to continue, or whether they are going to introduce regulation, consumers remain unprotected," the report said.

The committee chair, Nicky Morgan MP, added that it was unsustainable for government and regulators to "bumble along, issuing feeble warnings to potential investors."

The report noted that better regulation could reduce the volatility of a crypto-asset. The price of a Bitcoin increased from $6,472 in November 2017 to $17,629 in December 2017, and then fell back to $7,208 in February 2018.

The lawmakers also suggested that Britain could, as part of regulatory reforms, position itself as a global center for crypto trading.

The digital currency exchange Coinbase contributed to the report as part of its work with trade body CryptoUK. In an email to CNBC on Tuesday, Coinbase UK CEO Zeeshan Feroz said the U.K. would need to introduce reforms quickly or risk losing out.

"The UK is in a race with other financial hubs around the world who are also vying to become the world's crypto capital, so it's important that this regulation is implemented as quickly as possible," he said.

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Regulation surrounding cryptocurrencies is underdeveloped around the world. The United States has suggested that the digital assets should be subject to federal laws by considering them as securities.