Recently, the United Kingdom’s Treasury Committee published a unanimously-approved report on cryptocurrency assets for its Digital Currencies inquiry. The report outlined several conclusions and recommendations for investors and the public at large.
According to the report, although cryptocurrency assets such as Bitcoin [BTC] and other altcoins have been embedded in certain groups of societies and industries in the United Kingdom, the committee is not convinced that ‘it’s here to stay’.
Furthermore, the United Kingdom government and financial regulators are still on the fence about whether they should let the current “wild west” situation take its course or announce regulation for the same. The report states:
“The Committee is aware of the establishment of self-regulating bodies in the crypto-asset industry such as Crypto UK, which set out codes of conduct and best practice for the industry. However, as these standards are wholly voluntary, there are inevitably firms ignoring them.”
The report further stated that cryptocurrency assets have no inherent value and due to the lack of ‘market fundamentals’, the prices rise and fall based on feelings and opinions. This according to the committee is the root cause of volatility that is far higher than other asset classes such as shares and bonds. Investors, therefore, will be vulnerable to both huge amounts of possible gains as well as enormous risks.
The committee confirmed that although blockchain has been used extensively in the financial services industry as well as supply chain management and has led to positive outcomes, these projects cannot be pursued independently.
The committee further added that they would support such a venture if the government was allowed to understand the issues that exist and make sure that blockchain is indeed the most suitable solution. The Financial Conduct Authority [FCA] stated:
“The FCA agrees with the committee’s conclusion that Bitcoin and similar crypto-assets are ill-suited to retail investors, and as we have warned in the past, investors in this type of crypto-asset should be prepared to lose all their money.”