In the last Parliament, we reported on crypto. We were concerned that potentially bringing firms into the regulatory perimeter might create a halo effect for some of the cryptocurrencies. Do you share that concern, Mr Smart?
Harriett Baldwin, a Conservative MP and the committee’s chair, told City A.M. that there were still “very real concerns about the risks posed to consumers by the cryptoasset industry… large parts of which remain a Wild West."
The government’s crypto ambitions were also temporarily upended last year when the Treasury select committee — a powerful cross-party group of MPs — called for the crypto sector to be regulated as gambling, rather than as a traditional financial service. The group, led by MP Harriett Baldwin, said cryptocurrencies including bitcoin have “no intrinsic value” and instead offer “huge price volatility and no discernible social good”.
The Commons Treasury committee, which is chaired by the Conservative MP Harriett Baldwin, published a report into the crypto market in which it warned ministers to take “a balanced approach to supporting the development of cryptoasset technologies”.
The MPs cited a government plan for the Royal Mint to develop a digital asset known as a non-fungible token (NFT), a project that was announced when Sunak first unveiled his crypto push last year but that has since been abandoned. The committee said: “It is not the government’s role to promote particular technological innovations for their own sake,” and argued that large swathes of the crypto industry “remain a Wild West”.
Effective regulation is clearly needed to protect consumers from harm, as well as to support productive innovation in the UK’s financial services industry,” the Conservative MP and Treasury committee chair, Harriett Baldwin, said. “However, with no intrinsic value, huge price volatility and no discernible social good, consumer trading of cryptocurrencies like bitcoin more closely resembles gambling than a financial service, and should be regulated as such.
So-called “cryptoassets” span a wide and rapidly evolving range of digital instruments,
although the market continues to be dominated by unbacked “cryptocurrencies” such
as Bitcoin and Ether that we do not consider to have any intrinsic value. Given their
potential impact on the financial services landscape, we have been paying close attention
to cryptoassets for many years. Our predecessor Committee published a Report in 2018
that called for greater regulation to protect consumers from an industry it described as a
“wild west”. Nothing we have heard in our current inquiry has changed that impression.
