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UK aims to broaden its regulatory scope of digital products that have the potential for “illicit activity
UK aims to broaden its regulatory scope of digital products that have the potential for “illicit activity" (image: shutterstock.com)

Great Britain May Ban Some Cryptocurrencies

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UK aims to broaden its regulatory scope of digital products that have the potential for “illicit activity" (image: shutterstock.com)

Great Britain could soon ban certain retail financial cryptocurrency products based on Bitcoin. The goal is to help prevent and capture certain forms of potentially harmful “illicit activity”.

Banning Cryptoassets

Britain may move forward in banning certain cryptocurrencies based on Bitcoin but with a far more dubious reputation. The country is aiming to broaden its regulatory scope of these digital retail financial products that have the potential for “illicit activity” which could cause harm to consumers and markets. This, according to a recent report from the finance ministry, Bank of England, and Financial Conduct Authority (F.C.A.).

These officials are seeking to overhaul the British policy and regulatory approach to cryptocurrencies and other forms of cryptoassets including initial coin offerings (I.C.O.) issued tokens.

Increasing Regulation

“The Taskforce has concluded that strong action should be taken to address the risks associated with cryptoassets that fall within existing regulatory frameworks,” said the report. “Further consultation and international coordination is required for those cryptoassets that pose new challenges to traditional forms of financial regulation, and fall outside the existing regulatory framework.”

The F.C.A. stated that cryptocurrencies do not have any intrinsic value. It added that this volatility places investors at risk of losing everything they invest, so they should be prepared for this possibility.

Cryptocurrency in the Grand Scheme

Cryptocurrency investing remains a small fraction of the investment whole. Bitcoin, the largest among the digital currencies, represents only 0.33 percent of daily global trade volumes, said the report.

Currently, there is an estimated 56 I.C.O. projects underway in Great Britain. They have been used to raise approximately $330. This represents around one percent of the global $24 billion raised by I.C.Os.

Increasing Scrutiny

The report details various milestones to be used for more careful cryptoasset scrutinizing. An additional consultation paper will be published by the close of 2018. This paper will be designed to offer greater clarity regarding the types of cryptocurrencies that do not adhere to the existing regulatory boundaries and whether those boundaries need to be changed.

The first quarter of 2019 will also bring an additional consultation regarding a possible ban on the sale to retail consumers of cryptocurrency derivatives, such as those for options and futures, and differences which reference certain forms of cryptoasset, said the report.

Note: The opinions expressed in this article are the author's own and do not necessarily reflect the view of Alvexo on the matter.