The UK cryptocurrency community is calling on the Government and the Financial Conduct Authority to toughen up rules governing the trading of virtual currencies and to issue licenses to firms which demonstrate compliance.

CryptoUK, the self-regulatory body set up to represent the sector, has set out new plans for HM Treasury to make cryptocurrency investment a regulated activity under the Financial Conduct Authority (FCA).

The plans are part of a written response by CryptoUK to the House of Commons Treasury Select Committee inquiry into digital currencies, which is currently underway in Parliament.

The group says that new rules should be applied to exchanges, brokers and trading platforms that facilitate the interaction between digital currencies and fiat money. It believes the FCA should be called upon to issue 'Crypto-Licenses' to approved platforms and enforce new requirements including appropriateness checks on investors, anti-money laundering rules and operational standards.

Iqbal V Gandham, chair of CryptoUK, says: “Introducing a requirement for the FCA to regulate the “on-off” ramps between crypto and fiat currencies is well within the remit of HM Treasury. Based on our analysis, this could be achieved relatively easily, without the need for primary legislation, and would have a huge impact, both in reducing consumer risk and improving industry standards.

“This is an approach which is already working well in other countries, who are now taking the lead over the UK, for example in Japan and Gibraltar."