Crypto is intended to be hard to regulate, but at least the Treasury wants to have a go | John Naughton

At the heart of the consultation document are two hard problems. The first is what to do about the trade in cryptoassets. The other is what to do about the DLT (AKA blockchain) technology that underpins much crypto activity.

The only way to impose regulatory order on this free-for-all is to regulate the exchanges that enable the trading of crypto tokens and their conversion to fiat currency (that is, real money). The problem for HM Treasury is that it can only regulate exchanges that are based in its jurisdiction and most of them will, such as the spectacularly insolvent FTX, be based elsewhere.

Permissioned blockchains, in contrast, restrict access to the ledger to known parties (banks, for example) who can update it. They are computationally more efficient and, in a way, are just a different kind of database. As such, they are relatively easy to regulate.

Action required An open letter by 1,500 computer scientists, software engineers and technology experts on the need to regulate crypto is published on concerned.tech.