Seven companies, including Coinbase, eToro, CoinShares, CryptoCompare, and others, have launched a self regulatory body for the crypto industry.
Iqbal V Gandham, UK Managing Director of eToro, who has been elected chair of CryptoUK for the first year, stated:
“This is a severely misunderstood sector that has great potential to improve our society. But we are hearing instances of rogue operators and consumer harm.
That’s why CryptoUK has been established: to promote best practice and to work with government and regulators to ensure that the UK benefits from the exciting potential of this international technology.”
The trade body has laid out a code of conduct that might act as a blueprint for future legislation in UK and perhaps around the world.
It requires, among many things, due diligence and appropriate checks, segregation of customer funds from company funds, “fair, clear and not misleading” communications as well as the use of cold wallets to secure crypto funds.
“CyrptoUK will… call on government to introduce appropriate regulation to protect consumers and business certainty, allowing the sector to flourish in the UK,” the trade body says.
They do not specify what sort of regulations they intend to push, but ICOs are not within their remits. They do however promise to develop a specific Code of Conduct for the Initial Coin Offering process.
“The Code of Conduct is at the heart of everything we do. It is not finished. It will be improved and refined, in collaboration with industry, policy makers and others. We hope it can form the blueprint for what a future regulatory framework will look like,” Gandham said.
It’s unclear whether UK regulators will back this newly formed body, but Coinbase UK chief executive Zeeshan Feroz said: “Regulation is imminent and that’s a good thing.”
Brian Quintenz, a member of the Commodity Futures Trading Commission, has recently called on the crypto industry to self-regulate, and many, including us here at Trustnodes, have been calling for a self-regulatory body for months.
Perhaps in response, ConsenSys announced in June 2017 a self-regulatory body of sorts to undertake due diligence on ICOs, but we haven’t heard much since.
That lack of pro-active action on the part of this industry might have led to a strict interpretation of current laws by the SEC, which has stated even autonomous code organizations are securities.
Many other regulators and lawmakers, however, appear to not quite agree with SEC, with a number of them stating it is too early for such strict laws.
But it is becoming clear by the day that either the industry has to stand-up and self-regulate or legislators will be left with no choice but to bring down the hammer.
Our preferred option would be somewhere in the middle, a self-regulatory non-governing body backed by appropriate authorities, such as FCA, creating a collaborative environment where all interested parties can learn how to strike the right balance. Towards that end, CryptoUK might be the first step.