In case you’re not already aware, within the United Kingdom, we are seeing the establishment of a government led cryptocurrency taskforce that has been set up to explore the potential for blockchain technologies and cryptocurrency within the UK. The taskforce is made up of officials from the UK Government, The Bank of England and HM Revenue and Customs. Together, they are working towards establishing UK based cryptocurrency regulations that will in turn, change the face of the cryptocurrency industry here in the UK. Considering the UK is a hub for blockchain start-ups, any future decisions made by the group will have a big impact market wide.
Recent events in South Korea, namely the hacks of exchanges Coinrail and Bithumb have sparked some debate within the taskforce, debate which is being extinguished by ‘CryptoUK’ a representative board for British cryptocurrency websites. According to Stuff (New Zealand), Iqbal Gandham, the chairman of CryptoUK has spoken to a number of members of parliament, with an aim to reassure them that though these instances of cybercrime are terrible, should the UK adopt a safe regulatory stance, they can ensure that this doesn’t happen within their exchanges.
According to Stuff, Gandham refers to cold storage as a viable solution, stating that members of his group (including platforms such as eToro) are required to store 90% of their assets within cold storage and that therefore, in the UK, the cryptocurrency taskforce will be able to ensure that the majority of traded assets in the UK, are kept offline for as long as possible. This at least prevents hackers from gaining remote access to them. Moreover, Gandham refers to a problem with uncertainty, that means UK banks do not want to work with cryptocurrency exchanges. This causes a problem in that the exchanges start working with off-shore banks in partnerships which could compromise security. Gandham states:
“99% of exchanges have bank accounts in far-flung jurisdictions and UK customers are sending their money to high-risk jurisdictions.”
You can see the full article for yourself here- https://www.stuff.co.nz/business/world/104951014/bitcoin-sites-play-down-security-threats-despite-korea-attack
By this, Gandham seems to be suggesting that actually, regulation in the UK can ensure that UK exchanges are only working with UK based banks and that therefore, the regulations can also help to control security protocols which in turn will prevent these hacks from happening.
So, as it stands, the UK cryptocurrency taskforce are indeed still exploring options. Without a doubt, these recent hacks will have put a spanner in the works, but, through working with groups like CryptoUK and Gandham, they are at least gaining useful insight into various solutions. Hopefully, the UK cryptocurrency taskforce can learn from the mistakes made by the authorities and exchanges in South Korea. Let’s hope they see this as a learning curve and not as an excuse to stamp out cryptocurrencies altogether.