Prepare to lose all your money: UK lawmakers warn cryptocurrency investors
British lawmakers have cautioned cryptocurrency investors, saying that they should be prepared to lose all their money as crypto assets and ICOs are “extremely risky”. A recent report, published by the British Parliament’s Treasury Committee, examines the cryptocurrency landscape and stresses the need for regulations in the industry, which will enforce consumer protection against digital assets and ICOs.
Last year, the Financial Conduct Authority (FCA) issued a consumer warning about the risks of ICOs. The warning went on to explain that ICOs are “very high risk, speculative investments”. The regulator had mentioned that investors should be “prepared to lose [their] entire stake”, emphasizing the absence of regulatory protections for cryptocurrency investors.
The report elaborates that there are no cryptocurrencies which satisfy the criteria for being a general currency. “Well-functioning cryptocurrencies currently exist only as a theoretical concept, and the term “crypto-assets” is more helpful and meaningful in describing Bitcoin, and the many hundreds of other ‘altcoins’ that have emerged over the past decade,” the report stated.
The lawmakers are of the view that the absence of regulation of cryptocurrency exchanges, that controls a huge share of cryptocurrencies, can be ‘problematic’.
“Crypto-assets have been embedded in certain pockets of society and industry, and it is highly likely that they are here to stay. The UK Government and financial services regulators appear to be deciding whether they will allow the current “wild west” situation to continue, or whether they are going to introduce regulation. The current ambiguity surrounding the Government’s and the regulators’ positions is clearly not sustainable,” reads the report.
The committee suggests that the lawmakers should analyze the risks posed by digital assets and then determine whether their growth is to be encouraged in the country. They believe that regulations will bring ‘positive outcomes’ for the cryptocurrency market and enterprises will be encouraged to create a better business model adhering to rules and regulations.
“If the UK develops an appropriate and proportionate regulatory environment for crypto-assets and if future innovations in crypto-assets proved themselves as beneficial to society and industry, the UK could be well placed to become a global center for this activity, providing that the crypto-asset market adhered to high standards and was not associated with criminality,” according to the report.
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