A group of U.K. lawmakers is calling on the government to introduce crypto financial services regulations sooner rather than later and to appoint a dedicated official to oversee the process.
In a report published Monday, the Crypto and Digital Assets All Parliamentary Group (APPG) said cryptocurrency is here to stay and needs immediate regulation. The group, which includes lawmakers from different political parties and both houses of parliament, made 53 recommendations for regulating crypto in the country.
Prime Minister Rishi Sunak’s government recently closed a consultation proposing that the U.K. regulates crypto by bringing it into the scope of existing financial services regulations. CryptoUK, a lobby group affiliated with the APPG, said in its response to the consultation that it wanted the U.K. to have specific crypto regulations in place within a year, a target the government has said it hopes to deliver.
Currently, crypto companies have to be registered with the Financial Conduct Authority (FCA) if they want to operate in the country.
"Given the rapid growth of cryptocurrency and digital assets, the timing of this report is vital to protect consumers whilst ensuring the U.K.’s leadership in this sector can be realized,” Lisa Cameron, chair of the APPG said in a press release on Monday.
The crypto APPG inquiry was launched in August last year. It followed an April announcement by Sunak, then the country’s finance minister, that the government wanted to make the country a crypto hub. As part of the inquiry, the APPG acquired views from members of the crypto industry, regulators and the general public.
In their report, lawmakers laid out recommendations for the government official's role and around the current approaches of regulators like the Bank of England, the Advertising Standards Authority and the FCA.
“Given the broad nature of cryptocurrency and digital asset regulation, Government will need to ensure that it has a joined up and coordinated approach across all governmental departments and agencies that will be impacted by the growth of cryptocurrency, digital assets and blockchain technologies,” the report said.
Many crypto companies have said they had “seen lengthy delays," or had their applications for registration rejected by the FCA without clear explanations as to the reasons why, the report said.
The lawmakers expressed in the report that they had concerns around whether or not regulators had sufficient resources to deliver on its crypto responsibilities and recommended that U.K. regulators have dedicated units for digital assets.
Other recommendations in the report included ensuring stablecoins are backed by high quality assets, ideally with fiat currency, so that they can be used as a form of payment, and that the environmental impact of crypto should be properly looked into by the government.
The APPG report comes after a call from the House of Commons Treasury Committee to regulate crypto as gambling instead of as financial services. The call was met with instant backlash from the local crypto industry. With Monday's report, the APPG aligned with the government's plans.
“We're very supportive of government's position that regulation should move forward in terms of financial services regulation, as has been depicted in the report for three main reasons. One is... I like people to pay tax when they make gains in the U.K. and it's very important that that's harnessed and that can only be achieved under the financial services regulation rather than gambling,” Cameron said at an event on the report at Thames Pavilion on Monday.
The APPG also explored "the potential" of a central bank digital currency, which the government is consulting on before it makes its decision on whether to issue one.
UPDATE (June 5, 09:39 UTC): Adds more detail from the report.
UPDATE (June 5, 14:17 UTC): Adds comment from Lisa Cameron from Thames Pavilion event.
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