A group of crypto executives have told MPs they want more regulation, saying the recent FTX collapse may not have happened if the industry was properly regulated.
Speaking to the Treasury committee yesterday (November 14), Ian Taylor, executive director at trade body CryptoUK, said: "If we had had some regulation, some of these recent events may not have taken place."
Daniel Trinder, vice president of government affairs at crypto exchange Binance, said the collapse of FTX was not due to failures around crypto or the associated technology.
"The key failures were largely down to issues relating to governance, risk management, excessive leverage, and inappropriate use of client assets", he said.
He added that these are "traditional failures" that have also plagued "traditional finance".
Tim Grant, head of Emea at Galaxy Digital, another crypto firm, told MPs he was concerned about the impact FTX’s collapse would have on the wider industry.
“Are we feeling upset that we have a very bad actor within our midst who was doing exactly what all of us would never do?”
“Yes, because that is going to [cause] a headwind.”
The government announced a consultation into crypto earlier this year, and Rishi Sunak has previously said it was his ambition to make the UK a ‘global hub’ for cryptoasset technology.
Taylor told MPs that to be able to adequately regulate the industry, the FCA would need more resources and better understanding and training around crypto.
The regulator has hired 95 additional staff in its authorisations division in the past year, alongside more financial analysts with market expertise in these areas, which it said had resulted in a 54 per cent reduction in the number of pending crypto registrations.
Trinder said the issues around a lack of resource at the FCA had been “well highlighted”.
“There needs to be a systematic education of the regulators if we want to improve the industry,” he said.
Susan Friedman, head of policy at crypto exchange Ripple, said she was encouraged by the FCA’s “forward leaning” attitude to crypto, which has been appreciated by the industry.
“Our expectation is that that will continue…[and] there is more that the industry can do," she said.
However, further effort is needed from enforcement agencies to tackle crime in crypto, Trinder said, adding that fraud was a "massive issue".
"[This is despite] it being easier to hide cash than to hide crypto assets.”
An FCA spokesperson said it continued to warn consumers to be prepared to lose all their money if they purchase cryptoassets as they are unlikely to be protected due to them being largely unregulated.
“Successful registration depends upon a firm meeting the minimum standards we expect to prevent money laundering and terrorist financing, and we have seen too many financial crime red flags missed by the cryptoasset businesses seeking registration.