Ripple, the world’s third largest digital currency, has urged British regulators to follow in the footsteps of Japan and implement new rules to end the “Wild West” days of the cryptocurrency market.
Ryan Zagone, head of regulatory relations at the transactions innovator and digital currency, called on UK regulators to strike a balance between “capturing risk and enabling innovation”. He highlighted three “pillars” for lawmakers to target in regulation: consumer protection, anti-money laundering and financial stability.
“We’re at that time now where we need more clarity and rules and we need more certainty. It’s a good time to start revisiting that ‘wait and see’ approach taken by regulators,” said Mr Zagone, comparing the regulatory environment on cryptocurrencies to the early days of the internet.
Japan overhauled its rules on Bitcoin last year, introducing legislation to protect consumers and forcing cryptocurrency exchanges to comply with anti-money laundering regulation. But revamping rules to include new crypto-assets has been slower moving in the UK.
Mr Zagone said that Japan had been a “leader” and could be used as a blueprint for other nations including Britain. Chancellor Philip Hammond unveiled a new taskforce last month to help safeguard consumers and included representatives from the Treasury, the Bank of England and financial watchdog the FCA.
He said the taskforce would help the UK “manage the risks around crypto-assets”. Bank of England Governor Mark Carney warned that Bitcoin and other cryptocurrencies face a regulatory clampdown, saying that they had all the “hallmarks of a bubble”.
The cryptocurrency market was rocked earlier this year by authorities across the globe signalling that they would crack down on the sector as the Bitcoin craze gripped markets. But Mr Zagone argued that regulation is needed to help the market mature and draw in new entrants.
“Regulation creates the guardrails on the highway that allows new entrants to come in, particularly institutional investors,” he said.
Retail investors are thought to have had their fingers burnt by the cryptocurrency market’s incredible rise and fall. Its price skyrocketed to a peak of more than $19,500 (£13,700) in December before tumbling back to $6,600 this month.
Analysts at Barclays recently compared Bitcoin to “an infectious disease”.