Should Cryptocurrency Be Regulated in the UK?
But who's responsibility could it be? Cryptocurrency is not classed as legal tender in the UK and therefore regulation of still it represents an enormous challenge. As Facebook prepares to launch its own cryptocurrency, called Libra coin, in June 2021, it is receiving some heavy criticism and scrutiny in the UK Government as well as President Trump, as concerns regarding potential fraud are elevated.
The idea behind Libra ended up being to produce a currency that everybody can access, without the need for a banking account. But, following a Cambridge Analytica scandal and concerns around data privacy, the chair of the UK's Culture, Media & Sport Committee, Damian Collins, has expressed doubt over whether Facebook can protect its users from fraud adequately.
Facebook's David Marcus has attempted to provide reassurances, stating that users don't need to trust Facebook to access Libra and that Facebook is committed to ensuring financial information is kept separate.
Regulators worldwide have real concerns about Libra though, also it was even raised in a recent G7 summit with attendees fearing cryptocurrencies as the Libra could pose a significant threat to global financial stability. The Governor of the Bank of England, Mark Carney had also raised similar concerns in June, although he explained he was remaining open minded about Libra's usefulness.
Further concerns raised by the FCA about Libra particularly centre round the size and scale of Facebook, as well as if the social networking company's propensity to maneuver fast means they may do not have the right culture to build up something which requires such consideration and attention to detail.
The UK has no laws regarding cryptocurrency at present even though the exchanges they take a seat on will have registration requirements. A short developed by HMRC outlines the tax management of cryptocurrency income in terms of capital gains tax, income tax, VAT and corporation tax. It's aimed at people who trade and mine Bitcoin and other cryptocurrencies, along with the exchanges and payment processers.
Most countries don't have any regulatory framework in place for cryptocurrency yet, and some countries have banned them entirely, however in April France introduced its cryptocurrency regulatory bill, and it has urged the rest of the EU to adopt this.
The French Parliament has approved laws which could attract cryptocurrency providers to become based there, because they could be officially recognised, while contributing to France's economy through taxation. In countries where cryptocurrencies are unregulated, investors have nowhere to show when things go wrong.
In France, investors might have confidence that cryptocurrency issuers have been verified, and also have anti-money laundering rules along with a viable strategic business plan in position. This protects investors from fraud, although it doesn't currently offer protection against losses incurred.
It seems France is taking charge in ensuring regulations are in place, so investors, miners, and cryptocurrency exchanges know where they stand, and can operate legally. Using the cryptocurrency market growing exponentially, other countries can't continue to stick their heads within the sand.
