A GROUP of the UK’s leading cryptocurrency platforms want the regulator to use peer-to-peer finance legislation as a framework for their own sector.
CryptoUK, a self-regulatory trade association with eight members, has set out new plans for the Treasury to make cryptocurrency investment a regulated activity under the Financial Conduct Authority (FCA).
The plans are part of a written response by CryptoUK to the House of Commons Treasury Select Committee inquiry into digital currencies, which is currently underway.
CryptoUK says that regulation should focus on those platforms that are facilitating the interaction between digital currencies and fiat – exchanges, brokers and trading platforms – not on the currencies themselves.
“Introducing a requirement for the FCA to regulate the ‘on-off’ ramps between crypto and fiat currencies is well within the remit of HM Treasury,” said Iqbal V Gandham, chair of CryptoUK.
“Based on our analysis, this could be achieved relatively easily, without the need for primary legislation, and would have a huge impact, both in reducing consumer risk and improving industry standards.
“This is an approach which is already working well in other countries, who are now taking the lead over the UK, for example in Japan and Gibraltar.”
CryptoUK says it would also like to see the Treasury use powers to grant the FCA new permissions to govern crypto investment.
The association also wants the FCA to issue “Crypto-Licenses” to approved platforms and enforce new requirements including appropriateness checks on investors, anti-money laundering rules and operational standards.
“This is a wonderful opportunity for government to take a proactive stance, putting action where there are positive words and reinforcing the UK’s role as the world’s financial capital,” said Gandham.
“We hope that the Treasury Select Committee considers these and adopts the ideas when it puts forward its own recommendations to the Treasury”.
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Such a move would reflect how regulation emerged in the P2P sector when major platforms including Zopa, Funding Circle and RateSetter formed self-regulatory body the Peer-to-Peer Finance Association in 2011 and pushed for FCA regulation which was first announced in 2014.