Cryptoassets: Regulation — [Christina Rees in the Chair]

Part of the debate – in Westminster Hall at 10:19 am on 7th September 2022.

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Photo of Peter Grant Peter Grant Shadow SNP Spokesperson (Europe), Shadow SNP Deputy Spokesperson (Treasury - Chief Secretary) 10:19 am, 7th September 2022

I am quite happy to take that unashamed plug for the APPG. Given that it has been mentioned and will be recorded in Hansard, I have no doubt that those who are interested in its work will take up my hon. Friend’s offer.

Crypto has all the characteristics of all the great scams in history; indeed, it has most of them on a scale that very few of those other scams had. It has the possibility to become and to facilitate the biggest scam in human history, if we let it. We need to co-operate with other jurisdictions to regulate in such a way that means that the sector continues to grow and deliver benefits, but does not expose, as I have said, either individuals or potentially whole economies to unacceptable risks.

Although I welcome the Government’s steps on regulation, which I hope will be only the first steps on a much longer journey, I am concerned that what has been offered to date has been a patchy and piecemeal approach to regulation, compared to the far more comprehensive proposals in, for example, the EU’s draft regulation. I would not expect the Government to admit it, but I worry that this is another example of settling for second best just to prove that we are different from the European Union.

We should always remind ourselves that even technological advances that end up having massive benefits for humanity can have their downside. I know a lot of people, including a lot of Members of Parliament, who are only alive today because of radiology and radiotherapy, and that would not have happened without the genius and greatness of Marie Curie, who is one of the greatest human beings ever to have lived. Marie Curie was killed by her own discovery. Indeed, almost all the people who were the first to receive the benefits of the “miracle” radium pills that followed on from her discovery died a horrible death from cancer.

The message is: let us not turn our backs on new technologies or be scared of innovation, but seize the opportunities that such technologies offer. But just as developments in scientific and medical technology can carry risks for humanity as well as huge benefits, so can advances in financial technologies. The technological advances that we are seeing just now are happening at a pace that we could not have imagined even four or five years ago. That means that regulation must be flexible and able to adapt very quickly to identify where the potential risks are and to close them down.

I would like to say that we have a Financial Conduct Authority that I am happy to trust with taking that message on board, but in my heart of hearts, as I have said both here and in the main Chamber often enough, the Financial Conduct Authority as it stands is not fit for purpose. It needs to be given a significantly stronger remit and significantly greater resources. There is no doubt that the FCA is the correct place for regulation to reside, but I ask the Minister not simply to talk about what is in the Financial Services and Markets Bill just now, but to give us an indication of how quickly the gaps in regulation that will still exist after the Bill has been passed will be filled. It is not only people who are enthusiastic about cryptocurrency who are watching this debate to see when regulation is going to become adequate; there are also people watching this debate who are looking for an opportunity to make vast sums of money at the expense of our constituents, if we allow them to do so.