The UK Treasury Committee has released a report revealing that 85% of cryptocurrency firms operating in the country do not meet minimum standards set by regulators. The findings have raised concerns about the potential risks posed to consumers and the broader financial system.
The report, which was based on a survey of 56 cryptocurrency firms, found that only 15% of firms met the minimum standards set by the Financial Conduct Authority (FCA) for anti-money laundering (AML) and countering the financing of terrorism (CFT) measures.
The FCA has been considering a ban on the sale of certain crypto assets to retail customers, citing concerns about the high risk of fraud and market manipulation in the sector.
In response to the report, the Treasury Committee has called for greater regulatory oversight of the cryptocurrency sector to ensure that consumers are protected and the stability of the financial system is maintained. The committee has also recommended that the FCA consider taking action against firms that fail to meet minimum standards, including revoking their licenses.
“The cryptocurrency sector is largely unregulated and opaque, and this is unacceptable given the significant risks it poses to consumers and the financial system,” said the Chairman of the Treasury Committee, Mel Stride MP. “The FCA must take a tough approach to firms that do not meet minimum standards and consider revoking their licenses where appropriate.”
The report comes as the UK government prepares to introduce new regulations for the cryptocurrency sector, including a mandatory registration system for all crypto firms operating in the country. The government has also indicated that it will consider the introduction of a ban on the sale of certain crypto assets to retail customers if the sector fails to improve its AML and CFT measures.
What is Cryptocurrency?
Cryptocurrency is a digital or virtual currency that uses cryptography for security and operates independently of a central bank. It is decentralized and operates on a technology called blockchain, which is a distributed ledger that records all transactions in a secure and transparent manner. Bitcoin, created in 2009, was the first cryptocurrency and remains the most well-known and widely used.
Cryptocurrencies are often seen as an alternative to traditional fiat currencies and offer several advantages, such as lower transaction fees, greater privacy and security, and the ability to make transactions without the need for a central authority. However, they also have some disadvantages, such as high volatility in value, the potential for use in illegal activities, and a lack of government oversight.
Cryptocurrency can be bought, sold, and traded on online exchanges and is stored in digital wallets. The use of cryptocurrency is still in its early stages, and its future and widespread adoption are uncertain. Some experts predict that it will become a widely used form of payment and investment, while others believe that it may be replaced by other technologies or fade away.
Overall, cryptocurrency is a complex and rapidly evolving area that raises significant legal, regulatory, and technological questions. It has attracted a great deal of attention from investors, governments, and the financial industry, and its role in the global financial system is still being determined.
