By A recent report published has stated that a group of United Kingdom lawmakers has called for greater oversight and regulation of the cryptocurrency industry.
These lawmakers argued that “crypto-assets have no inherent value” and are “especially risky” for retailers wanting to invest and are “particularly vulnerable to manipulation” stated the report. They also stated that “the introduction of regulation should be treated as a matter of urgency” when referring to the crypto industry.
This report came mere months after it was first announced that the UK Treasury Committee would be looking into the benefits and risks of digital currencies. 
The Financial Conduct Authority (FCA) who are the nation’s number one financial regulator is being eyed by the group and they want to give them more authority in order to regulate the available crypto markets.
The report also noted that the current initial coin offerings (ICO’s) could possibly exploit various loopholes in an attempt to avoid being put under scrutiny by the agency.
“Apart from drawing attention to the risks, there is little the FCA can do to protect individuals from being defrauded or losing their money. This is because most ICOs do not promise financial returns, but instead offer future access to a service or utility, meaning they fall outside the regulatory perimeter,” the report stated.
The UK lawmakers also went on to state:
“While there may be no explicit promise of financial returns, investors in ICOs clearly expect them: they are not buying tokens to gain access to as-yet unbuilt theme parks, or to obtain dental services in years to come, but in the hope of selling them at a profit. The development of ICOs has exposed a regulatory loophole that is being exploited to the detriment of ordinary investors.”
The Risk Of Lack Of Stability:
The report also highlighted the constant fluctuations in speculation as found around the cryptocurrency sector – “in the absence of any market fundamentals, their prices fluctuate according to sentiment.”
Of course, as a result of the speculation found within crypto, these digital currencies bare more volatility than other asset classes which leads to either greater gains or greater losses for potential investors.
“The use of blockchain as a payments system exacerbates these risks since the exchange rate (vis-à-vis other crypto-assets, or conventional currency) can fluctuate significantly during the time it takes to settle a transaction,” the report added.
With all that being said, however, the lawmakers also went on to say that cryptocurrencies don’t pose any threat to financial stability due to the current small amount of investors and users.
They also noted that blockchain and crypto can be seen in a positive light if they are regulated correctly.
Finally, the report also noted that “if the government decides that growth is to be encouraged, the committee believes that the introduction of regulation could lead to positive outcomes for the crypto-asset market.”
Do you feel that the regulation of the cryptocurrency markets could lead to a better future for digital currencies? Let us know your thoughts by commenting below.
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