The crypto industry is “a complete disaster” at the moment, said Godfrey John Bewicke-Copley, a member of the House of Lords, at an All-Party Parliamentary Group (APPG) meeting on Wednesday.
In fact, he advised that the industry “ditch” the word “crypto” altogether.
“Please, if we are going forward, let's not call it crypto anymore. Please, don't call it criminal money. Just call it digital currency or something. Just ditch the crypto,” he said.
Bewicke-Copley – whose official title is Lord Cromwell – said the crypto industry needs to work to get regulators on board, and may need to do some rebranding.
The APPG met to discuss the challenges and opportunities of crypto. Cromwell, a member of the Parliament’s upper chamber, said that U.K. regulators like the Financial Conduct Authority (FCA) are dealing with a tough landscape, and “so all this initial talk about this is a great opportunity and we want to be the center for it, that may be guff that politicians give you.”
The “guff” he was referring to is Prime Minister Rishi Sunak’s well-publicized goal of making the U.K. a crypto hub – intentions Sunak had announced in April when he was the finance minister. That was just before a series of high-profile bankruptcies and company collapses crippled the industry and markets.
Andrew Griffith, Sunak’s economics secretary, reiterated the U.K. government’s commitment to turn the country into a crypto hub in the wake of FTX’s demise, saying lawmakers would be “foolish to ignore the potential of the underlying technology” during TheCityUK’s National Conference in Edinburgh on Thursday.
Cromwell took aim at lawmakers’ fear of missing out on the fintech innovations crypto promises.
“You talk about missing the boat. The harbor is full of boats that have been loaded with explosives that are going off all around you, that are sinking. That is the landscape that the FCA is looking at,” he said, adding that the "bad boats" should be left at sea to "burn away."
All eyes are now on the implosion of failed crypto exchange FTX, but crypto lenders BlockFi, Celsius Network and Voyager Digital have also filed for bankruptcy protection this year. In May, crypto issuer Terraform Labs collapsed and dragged crypto hedge fund Three Arrows Capital down with it.
Crypto’s ‘Lamborghini phase’ is over
Crypto exchanges and custody providers looking to operate in the country must register with the FCA and comply with the country’s anti-money-laundering rules. On Monday, at the Financial Times crypto summit, APPG Chairwoman Lisa Cameron said the crypto community had complained that adhering to the FCA’s requirement was “difficult.”
Earlier in November, FCA CEO Nikhil Rathi said, “We have refused applications, or they have been withdrawn, 85% of cases, because we have not been satisfied that they would meet the standards that we believe are proportionate and reasonable.”
Just months before the collapse of FTX, the FCA warned U.K. customers that the exchange wasn’t authorized to operate in the country. Cromwell said the regulator breathed a sigh of relief for not letting FTX in.
“The reality is FTX blowing up was about the last straw. There are good bits of crypto. God knows, I have been promoting it long enough. But if you think that you’re cheerfully looked at by the regulator now, you are wrong,” Cromwell said at the meeting.
Industry experts in the room agreed with Cromwell.
“The Lamborghini phase of crypto is over. We need to show utility and how we are going to bring financial prosperity and/or access to the next billion users. That path needs to be laid out very clearly,” Teana Baker-Taylor, the U.K. and European Union vice president of policy and regulatory strategy at stablecoin issuer Circle, said at the APPG meeting.