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The UK MPs have fallen out of favor with crypto experts after proposing a new regulation that would see the Financial Conduct Authority (FCA) cracking down on illegal cryptocurrency activities. Some experts have weighed in on the latest developments claiming that it could damage the crypto industry and drive cryptocurrency exchanges out of the country, reported the Telegraph on Oct. 29th.

If this happens, it could negate the efforts done so far to turn the UK into a fintech hub. The government wants to grant the FCA more power (under the new Regulated Activities Order) to govern the country’s financial markets and group crypto assets under the same umbrella as traditional assets.

In response to the government’s proposal, a report was co-authored by the British Business Federation Authority (BBFA), Baker Botts law firm, Novum Insights venture capital fund, and TodaQ cryptocurrency exchange. The report criticized the government’s position and even claimed that “bad regulation is worse than no regulation at all.”

Patrick Curry, the CEO of the BBFA is of the view that the inappropriate regulation is detrimental to the growth of the crypto industry. In the long run, cryptocurrency exchanges could leave the country and settle in jurisdictions where there are attractive laws.

This has already happened before. When China outlawed initial cryptocurrencies and banned cryptocurrency exchanges, the companies set up their operations in countries such as Singapore and more recently, Malta.

The UK also stands to lose its status as a fintech hub due to the unfavorable regulation. Curry said:

“It is a very blunt instrument approach and I haven’t seen this in other countries. The use of this technology is still a voyage of discovery and these technologies are being refined for different types of use. My concern is the law of unintended consequences.”

Neil Foster, a corporate technology partner at Baker Bots, wants to see a more sophisticated regulation that does not bundle together stocks, bonds, shares, and crypto assets.

He said:

“With sophisticated classification, we should work out what could be a regulated activity. If you crowbar everything into the Regulated Activities Order you are making everything into an investment bank.”

The UK has been at the forefront of fintech innovation. Reports surfaced in September that the Securities and Exchange Commission of India (SEBI) sent its representatives to the UK and other countries to study how they regulate cryptocurrencies. By many standards, the UK served as a model on how other countries should regulate cryptocurrencies, but this seems to be changing.

In September, The UK treasury committee called for the FCA to supervise the industry and protect investors and curb financial crimes such as money laundering.

Speaking to BBC, Nick Morgan, a Conservative MP and chair of the committee said:

“It’s unsustainable for the government and regulators to bumble along issuing feeble warnings to potential investors, yet refrain from acting. At a minimum, regulation should address consumer protection and anti-money-laundering.”

CryptoUK, a self-regulatory body established in February welcomed the committee’s recommendations.

Experts Criticize UK MPs for Their New Proposal on Crypto Regulation was originally found on [blokt] - Blockchain, Bitcoin & Cryptocurrency News.

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