The All Party Parliamentary Group (APPG) for digital assets and crypto is urging the Government to introduce tougher restrictions on the crypto sector.
The APPG set out a 53-point plan earlier this week to prevent the UK from falling behind in global crypto market regulation.
Dr Lisa Cameron MP, chair of the APPG, said:
"The growth of the cryptocurrency and digital asset sector, without comprehensive regulation, presents considerable risks, particularly in terms of consumer protection, economic crime, and financial stability.
"Regulation of cryptocurrency and digital assets within financial services is vital to addressing consumer risks whilst harnessing the sector's potential and contribution towards economic growth."
The APPG also urged HMRC to release a "clear framework" that introduces a stricter tax treatment of cryptoassets. It said:
"The Government should consider issuing updated guidance on the taxation of cryptocurrency and digital assets in the UK and also consider a comprehensive tax framework which ensures that the UK remains internationally competitive."
Although HMRC has already issued guidance on taxing cryptoassets, the group believes the tax treatment rules still need to be clarified for investors.
In recent years, investment in cryptocurrency and digital assets has increased significantly, with around 2.3 million people holding some form of cryptocurrency in 2021.
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