Rob Brockington takes an overview of the Treasury report on crypto-assets.
To people already significantly invested, the Treasury Committee report on crypto-assets this week, gave them nothing they didn’t already know. Although by reaching as far the halls of Parliament and commanding a review for regulation, it may be considered to be a victory of sorts to see crypto penetrate yet another level of society.
There were a couple of takeaway phrases which went both ways in helping to establish crypto-assets as viable or customer-safe investments. A phrase like ‘wild west’ and the obvious associations it has with boundless opportunity mixed with hostile lawlessness, doesn’t act as great PR for the industry.
Regulation & Acceptance
However, with the committee essentially concluding that regulation was ‘needed’ it is fair to say that the acceptance of crypto-assets and the potential economic benefits there are for harbouring an improved standard of practices, is reaching new levels with the would-be-regulators.
To the uninitiated, the report confirmed a number of issues surrounding the industry including the known use of crypto for facilitating transactions of illicit goods and money-laundering. The lack of regulation also highlighted the absence of an honest portrayal of the true risks and benefits involved in crypto ownership. For the legitimate businesses within the crypto-related industries, these negative news stories are equally frustrating and some action to secure the environment would be warmly welcomed.
Struggling to Keep Pace
Regulation is only a positive step as long as those regulating are competent authorities on the subject. The government will struggle to obtain the talent required to keep pace with the tech firms in the UK and Europe (soon to be competing arenas) who are currently able to pay ‘top dollar’ and still struggling to fill all positions. Institutional money has been involved in crypto for a while now— whether it is openly admitted or not —so it’s definitely ripe for regulation. Still, this task must be executed with technology at its heart, or it will simply stifle innovation and retreat underground.
The real issue here is that the non-transparent nature of banking will be completely disrupted in order to bring crypto into the mainstream. The entire finance industry is propped up by the fact that only a small percentage of people really understand how things work and how money moves, or doesn’t move, around. Lets not forget that Bitcoin was created in response to the financial crisis.
Old-Fashioned Push Back
Attempting to hold crypto-assets to standards which old-fashioned currency itself cannot meet is evident in the headline reactions to exchanges being stolen from – as if banks had never been robbed in the past. It would also be naive not to expect that ‘naysayers’ in the banking world, rooted in their own style of investments, will push this back for as long as possible. Attempting to diminish the potential value that crypto could give to the wider financial system as frail as it has proven to be.
Nonetheless, the more the technology behind crypto becomes mainstream and draws the attention of experienced and proven experts – the more it will evolve. Innovating as it has done to-date – repairing the flaws in its own security, functionality and practicality.
View or download the full report.