Treasury Committee touts Brexit Britain as possible global centre for Bitcoin. Oh dear

The committee is in many ways stating the obvious with its call for tighter regulation of cryto-currencies, but its suggestion that Britain could become its global centre with 'the right regulatory environment' is disturbing

James Moore
Chief Business Commentator
Wednesday 19 September 2018 10:54
Bitcoin frightens the life out of regulators and businessmen alike
Bitcoin frightens the life out of regulators and businessmen alike

“Wild West,” cryptocurrencies - or crypto-assets - put investors at grave risk and serve as catnip to criminals looking launder dirty money. We must do something!

Well, duh. The Treasury Committee’s report into the things (which my opening paragraph summarises) is in many respects a fine example of statin’ the bleedin’ obvious.

The problems posed by bitcoin and its ilk were clear before the recent collapse in its value.

Last year Jamie Dimon, the boss of JP Morgan, went as far as to describe it as “a fraud” before rowing back (a bit) on the comments. His pal Warren Buffett has also weighed in.

‘Wolf of Wall Street’ Jordan Belfort had a go last month, telling CNBC: “I was a scammer, I had it down to science, and it’s exactly what’s happening with bitcoin.”

If you won’t entertain high priests of capitalism like Messrs Dimon and Buffett, how about the huckster who flogged dodgy rosary beads?

Whether there is an effective way to regulate a willow-the-wisp that vomited forth from the internet and has no national base is open to question.

There is a task force involving the Treasury, the Bank of England and the FCA engaged in looking at that very subject. They are not alone. There are authorities saying “what shall we do?” while they wait for the coffee to be brewed wherever you care to look.

There are options. One possibility is regulating the exchanges set up to facilitate the conversion of crypto currencies into real currencies. Problems that have arisen with these include users ending up permanently locked out of accounts when they lose their passwords.

But bringing crypto-whatevers into the regulatory arena is potentially dangerous. It could be that the current approach of the Financial Conduct Authority (FCA) that the committee criticises - warning people they run the risk of losing all their money if they get involved - is the right one. They are, as it has said, ill suited to retail investors. An FCA stamp on the boiler plate of a broker or exchange dealing in them risks legitimising them.

The committee advises the Government and regulators to “evaluate the risks of crypto-assets, and assess whether their growth should be encouraged”. Well, duh (again).

But there is one part of its missive that is worthy of closer scrutiny, and it ought to make anyone with an ounce of sense feel queasy.

“If growth is favoured, regulation could lead to positive outcomes for the crypto-asset market, including the move toward a more mature business model and increased liquidity," it declares.

“If the UK develops a proportionate regulatory environment for crypto-assets, the UK could be well placed to become a global centre for this activity.”

Yes, it actually says that.

During his fiery denunciation of bitcoin last year, Mr Dimon said this: “If you were in Venezuela or Ecuador or North Korea or a bunch of parts like that, or if you were a drug dealer, a murderer, stuff like that, you are better off doing it in bitcoin than U.S. dollars.”

Venezuela, Ecaudor, North Korea, and perhaps Brexit Britain, as the new global centre of their favourite tool?

If you thought the current exercise in national stupidity couldn’t get any worse, think again.

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