UK Government is Looking into Cryptocurrencies with New Task Force

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UK Government is Looking into Cryptocurrencies with New Task Force

By Rebecca Campbell - min read
Updated 22 May 2020

U.K. Chancellor of the Exchequer Philip Hammond has today announced that the government is getting a ‘new crypto assets task force’ designed to make it easier for fintech companies to follow complex regulations.

The Chancellor delivered a speech at the government’s second annual International Fintech Conference in London. Hammond revealed that those forming the new task force will include the Bank of England, representatives from the Treasury, and Britain’s financial watchdog, the Financial Conduct Authority.

During his speech, Hammond announced the launch of the new task force:

“A new task force will help the U.K. to manage the risks around crypto assets, as well as harnessing the potential benefits of the underlying technology.”

In February, the Treasury announced that it was conducting an inquiry into the issues regarding cryptocurrencies and the potential risks they pose, including money laundering, cybercrime, and price volatility. At the time, Nicky Morgan, Member of Parliament (MP), and chair of the Treasury Committee added that it would also ‘examine the potential benefits of cryptocurrencies and the technology underpinning them.’

In light of the new task force news, Iqbal Gandham, U.K. Managing Director at eToro, one of Europe’s largest cryptocurrency retailers, said to CoinJournal that the launch of the task force was an ‘important step forward’ in ensuring consumer protection and the longevity of the market.

“This is a truly exciting market, with a huge amount of potential, which unfortunately a small number of rogue providers have taken advantage of,” he said. “But the industry as a whole shouldn’t be tarred with the same brush.”

David Siegel, CEO and Founder of the Pillar Project, a non-profit based in Zug also welcomed the news but called for regulators to look at ways to introduce new frameworks, rather than relying on existing rules which he feels do not work.

“I am very excited that regulators are listening. They should be focused on exposure, not risk. I have tried to show that it’s practically impossible to regulate financial products even without crypto-assets. Now, assuming we will over the next 20 years tokenize and trade all asset classes, it’s time to rethink legislation and regulation from the bottom up, not try to patch the existing framework.”

The news of this comes at a time when there have been increasing calls for the market to be regulated. Earlier this week, G20 economic leaders set a July deadline for cryptocurrency regulation recommendations. Whereas, the U.S. Securities and Exchange Commission (SEC) is seen to be cracking down on digital currency exchanges in the country.

Though most legitimate cryptocurrency businesses are favour of some form of regulation, most are in agreeance that regulators must work closely with members of the cryptocurrency industry. This is not simply to help protect investors from fraudulent companies, but also to prevent innovation in the industry from being stifled.

When asked for comment on Hammond’s announcement, David Moskowitz, Co-founder, and Director of Indorse said:

“It’s extremely important for the industry to work together with the regulators to both help the regulator understand the technology and assist in creating the proper regulatory frameworks which reduce potential risks to the economy and consumers, while not inhibiting innovation. In Singapore, the non-profit association ACCESS talks frequently with our regulator MAS and has provided important feedback on consultation papers put out to the industry. This allows us to give feedback to the regulator on how the proposed frameworks may impact the industry and how what we believe would be a more appropriate regulatory structure.”

Hammond also announced several other new measures including ‘robo-regulation’ pilot schemes to help new fintech firms, and the financial services industry more widely, comply with regulations by building software which would automatically ensure they follow the rules, saving them time and money.’

In January, Theresa May, the U.K.’s Prime Minister, said, while speaking at the World Economic Forum, that bitcoin monitoring should be considered ‘very seriously,’ after expressing her concerns that it could be used by criminals.