Cryptocurrency

I recognise that cryptocurrencies are a fast-evolving part of the financial world. Enthusiasts view them as offering exciting opportunities, while regulators are aware they also represent serious challenges. As with any powerful new technology, it’s vital we approach it with an open mind but also with the understanding that it can’t be misused to exploit the vulnerable, unwary, and digitally excluded/challenged.

I also recognise that although crypto assets currently make up a modest slice of the global financial system (just 0.4%), they nevertheless represent a market worth over $2.5 trillion. The UK enjoys a world-renowned financial services sector, which means we’re well placed to help shape this space and help manage the risks.

We mustn’t ignore the risks. Unregulated and unbacked cryptocurrencies can be wildly volatile, putting people’s savings at risk. A small but significant portion is used for illicit activity. And the environmental cost, especially from “crypto mining”, remains deeply concerning, despite some progress.

Regulation in the burgeoning field is therefore required. I am encouraged that the Government has taken steps in recent years: 

• Since 2020, crypto exchanges and wallet providers must register with the FCA and meet anti-money laundering standards. 
• The FCA now has powers to ensure crypto promotions are fair and not misleading. 
• The Financial Services and Markets Act 2023 brought crypto assets under the umbrella of existing financial regulation.

However, Ministers must remain vigilant and proactive. My Liberal Democrat Parliamentary colleagues and I call for: 

• A well-resourced FCA which can keep pace with rapid developments. 
• Stronger consumer protections, especially as more people engage with crypto during a cost-of-living crisis. 
• Tougher action against the use of crypto for criminal purposes. 
• International cooperation to tackle the high carbon footprint of some crypto technologies.

We mustn’t allow innovation to outpace responsibility. With a sensible approach, we can harness the potential benefits of cryptocurrency while protecting people, our economy, and our planet.