The UK government should take action to regulate the "Wild West" crypto-assets market, says a group of senior MPs, arguing that with proportionate oversight the country could become a global centre for the fast-growing sector.
The Treasury select committee report warns that because crypto-assets such as bitcoin, as well as most ICOs, are not within the Financial Conduct Authority's scope, investors have very little protection from a "litany of risks".
With the FCA absent, the industry is reliant on self-regulation, which is "clearly insufficient" say the MPs, likening it to the Wild West, where investors are at risk due to hacks on exchanges and price volatility and criminals launder their ill-gotten gains.
The committee says that it "strongly believes" that regulation is needed to address, at a minimum, consumer protection and anti-money laundering issues.
Committee chair Nicky Morgan MP says: "It's unsustainable for the Government and regulators to bumble along issuing feeble warnings to potential investors, yet refrain from acting."
However, the report does not dismiss the crypto industry and says that, in deciding its regulatory approach, the government should assess whether growth should be encouraged.
"If the government decides that crypto-asset growth should be encouraged, appropriate and proportionate regulation could see the UK become a global centre for this activity," says Morgan.
The report also addresses the decentralised blockchain technology behind crypto assets, criticising it as "slow, costly and energy-intensive", arguing that this may limit the extent to which the likes of bitcoin can replace conventional money and payment systems.
Read the full report