Author: Syedur Rahman
3 February 2022
2 min read
The newly-created Crypto and Digital Assets Group (CDAG) is noteworthy for being a joint House of Commons and House of Lords initiative aimed at making sure that new rules for governing the digital asset industry will boost innovation.
Some of those involved have talked about the crypto sector being at a defining point. With policymakers in various nations now wrestling with both legal issues relating to cryptoassets and how they should be regulated, decisions made in the near future may have a long-lasting impact.
CDAG is a cross-party group set up in response to the need to analyse and then address concerns regarding crypto-related fraud and other white-collar crimes involving digital assets.
The lack of consumer protection in this sector has been an issue that has occupied the legal, regulatory and political landscape in recent years. The problems of crypto and crime were brought into sharp focus when blockchain data company Chainalysis produced a report stating that criminals laundered cryptocurrency worth more than £6.6 billion in 2021.
The task facing CDAG, therefore, is a sizeable one. Its members include Ed Vaizey, the former minster with responsibility for digital industries, and Conservative MP Harriett Baldwin, who used to be an executive at the investment bank JP Morgan and is a Treasury Select Committee and Finance Committee member. Ultimately, CDAG’s success or failure will depend on its ability to understand – and even anticipate – developments in the crypto world.
While the cryptocurrency sector presents many opportunities, the risks and the potential for rapid change will have to be responded to by CDAG. There is little doubt that the UK has to take strides to play catch-up when it comes to crypto – at least it does if it wants to retain its position as one of the leading global centres for financial services. A glance at the European Union will show that the European Union Markets in Cryptoassets Regulatory Proposal (MiCA) is already in place, having been adopted almost a year and a half ago.
An ill-judged or overdue response from the UK may do little to boost innovation and protect consumers, and may even prove harmful. Nobody with any genuine involvement with crypto could argue that there is no need to ensure there are legal and regulatory frameworks capable of meeting the evolving demands created by cryptocurrency. But many of those same people can see the dangers that could result from the lawmakers and regulators getting it wrong.
We are at least at the stage where the need for regulation and increased transparency is recognised as being central to harnessing the benefits and minimising the risks of cryptocurrency. CDAG looks set to play a large role in ensuring this. But it is a part that needs to be played with a great deal of thought.
Syedur Rahman is known for his in-depth experience of serious fraud, white-collar crime and serious crime cases, as well as his expertise in worldwide asset tracing and recovery, international arbitration, civil recovery, cryptocurrency and high-stakes commercial disputes.