By Daniel Lanyon on 2nd March 2018
The wild west of fintech is to be made to fall in to line owing to its use in illegal activities and risks to the broader financial system.
Cryptocurrencies are set to be regulated in the future, the governor of the Bank of England Mark Carney has warned.
The move, which would see crypto exchanges overseen by a regulatory body and a light shone on transactions, is to some an unsurprising clampdown signposted by Carney himself recently and to others an existential threat to the purpose of the likes of Bitcoin and Ethereum that allow payments and transactions to occur anonymously.
“The time has come to hold the crypto-asset ecosystem to the same standards as the rest of the financial system,” Carney said in a speech today.
The Treasury Select Committee recently decided to decision to launch an inquiry into digital currencies, welcomed in some quarters by the emerging largest firms operating in the UK space such as Coinbase and eToro.
In fact these firms have rallied round the notion of greater oversight of the industry, forming a new trade body Crypto UK.
The trade body said in recent statement:
“As some of the leading businesses in the cryptocurrency industry we believe that under the right regulatory framework, there is an opportunity for the UK to become a global leader in this exciting technology. Our message to the Treasury Select Committee is that it is entirely possible to deliver a regulatory framework which ensures consumer protection and which enables crypto businesses to thrive”.
Cleary this is not enough for the Bank of England governor though who said he was concerned that investors may lose money and that continued growth of crypto currencies could one day pose a risk to the financial system.
This all comes at a crucial time for many alternative finance and fintech firms who have increasingly waded into the market.
Firms such as Revolut, which added cryptocurrency functionality to its marketplace in recent weeks, are being joined by others such as LendingBlock, a crypto lending platform, in building a bridge between the more mainstream services of fintech and its wild west.
One of the larger IFA firms de Vere has also launched its own cryptocurrency app.