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Cryptoassets: Regulation
07 September 2022
Lead MP
Martin Docherty
West Dunbartonshire
SNP
Responding Minister
Richard Fuller
Tags
Crime & Law EnforcementTaxationClimateForeign Affairs
Word Count: 12436
Other Contributors: 5
At a Glance
Martin Docherty raised concerns about cryptoassets: regulation in Westminster Hall. A government minister responded.
Key Requests to Government:
The Government should enforce existing laws against fraud, better train those dealing with enforcement, and ensure the Financial Conduct Authority is properly funded. Additionally, he calls for robust debate on the Financial Services and Markets Bill to address financial inclusion in crypto regulation.
How the Debate Unfolded
MPs spoke in turn to share their views and ask questions. Here's what each person said:
Lead Contributor
The market has been allowed to proliferate, drawing in uninitiated small-scale investors who may fall victim to scams and fraud. The author highlights issues such as lack of regulation, environmental impact, technical imperfections, and the need for financial inclusion and accountability. He mentions that many of his constituents are at risk due to their limited access to traditional investment opportunities and the potential for economic hardship.
Erith and Thamesmead
Welcomed the debate on cryptoassets, noting that an estimated 2.3 million people in the UK own cryptoassets. Raised concerns about the lack of regulation leading to increased risk for consumers with up-to-date research showing one in five UK citizens has lost money in the crypto crash. Highlighted illicit activities worth over £500 million and unregistered cryptoasset firms operating without proper checks, potentially exploiting anonymity-enhancing technology. I thank the Minister for his answers. He said that it is the regulator's responsibility to address this, but the Government also need to take responsibility. I would be grateful if the Minister could let us know whether the Government will produce a comprehensive framework. Can he also tell us what work the Government have done to check that the FCA has the capacity and expertise to look into this?
Rother Valley
Mr Stafford thanked the hon. Member for West Dunbartonshire and highlighted the importance of welcoming cryptoassets in Britain to benefit the whole UK, not just London or the south-east. He emphasized the need for public education on cryptocurrencies' risks and rewards and called for increased regulation to protect consumers while encouraging business growth. Acknowledged the importance of properly regulating blockchain technology but expressed concern over the lack of enforcement against fraudulent activities in the crypto sector, highlighting issues such as unregistered firms operating without anti-money laundering checks.
Jim Shannon
DUP
Strangford
Mr Shannon expressed concerns about the potential risks and dangers of cryptocurrencies, highlighting that around 100,000 people in Northern Ireland use cryptocurrency as a form of finance. He mentioned that some 38% of people in Northern Ireland have thought about purchasing cryptocurrency but have not yet done so. Mr Shannon emphasised the importance of regulation to ensure consumer protection and highlighted instances where cryptocurrencies have been linked to organised crime and money laundering. Emphasized the need for a clear strategy on regulating cryptoassets and blockchain technology, raising concerns about fraudulent activities and the risks associated with cryptocurrencies. Called for action to address money laundering and fraud in this sector.
Lisa Cameron
SNP
East Kilbride, Strathaven and Hamilton West
Thanked the hon. Friend for bringing an important debate on cryptoasset regulation to Westminster Hall, highlighting consumer protection as a key aspect of any regulatory framework. Mentioned positive examples from Scotland such as Zumo in north Edinburgh and Scotcoin in north Glasgow. Questions the slowness in registering companies within the UK due to issues with FCA registration, noting that some firms are relocating to Switzerland and France. Ms Cameron agreed with her colleague's points, stressing that consumer protection must be prioritised in the work taken forward. She encouraged those interested in the sector to engage with the crypto and digital assets all-party parliamentary group which is currently engaged in an inquiry into the sector. Ukraine is now one of the countries using most crypto during wartime to support its economy and troops. However, there is a risk of sanctions evasion through digital currency that needs addressing. I thank the Minister for his important points about taking things forward in a progressive way. Given the current uncertainty in the Government sphere, while the UK is still committed to making the UK the global home of crypto, what progress has been made in establishing the cryptoasset engagement group that was announced in April, to bring on board leaders from the sector and engage positively?
Peter Grant
Lab
Denton and Reddish
Emphasized the need for quick regulatory action to prevent a crypto bubble from bursting, highlighting the collapse of Terra and stressing the importance of consumer protection. Noted that London's reputation as a financial center is at risk due to fraud concerns. Cautioned against overlooking environmental impacts, stating there is no future without a low-carbon approach. Urged for comprehensive regulation and adequate resources for the FCA.
Government Response
Richard Fuller
Government Response
It is a great pleasure to serve under your chairmanship, Ms Rees. I join all hon. Members who have spoken in congratulating the hon. Member for West Dunbartonshire on securing the first parliamentary debate on this topic and covering the opportunities and risks of crypto technology. During today's debate, hon. Members focused largely on the risks of new technology, concerns about consumer protection and regulatory clarity. The minister highlighted issues such as financial inclusion, requirements for carbon neutral data centres, and enforcing existing law against fraud. He discussed distributed ledger technology (DLT), blockchain, and cryptoassets, noting that CBDCs are structurally different from cryptocurrencies. The Government has committed to issuing a public consultation on central bank digital currency later this year. The minister addressed the issue of financial inclusion in CBDC design decisions and highlighted the potential for DLT to change how financial markets work and enable groundbreaking new products and services. He emphasized the need to manage risks, such as using cryptoassets to hide ill-gotten gains or issues related to energy intensiveness in creating some types of cryptoassets. The minister mentioned legislating to bring certain cryptoassets into the scope of financial promotions regulation and discussed the Financial Services and Markets Bill's approach to regulating stablecoins and broader cryptoasset markets through consultation with industry participants. He also highlighted the importance of a dynamic regulatory landscape, informed by sector engagement, and expressed confidence in the FCA's resources and skills. The Government aims to be at the cutting edge of legal innovation for digital assets and smart contracts, enhancing UK tax competitiveness for further development of the cryptoasset market.
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About Westminster Hall Debates
Westminster Hall debates are a chance for MPs to raise important issues affecting their constituents and get a response from a government minister. Unlike Prime Minister's Questions, these debates are more in-depth and collaborative. The MP who secured the debate speaks first, other MPs can contribute, and a minister responds with the government's position.