Marketing experts and participants say the UK's new rules will help stamp out the worst excesses of crypto investment promotion, after regulators issued 146 warnings about fraudulent activity in the first day of regulation. “We are making progress,” he said.
The Financial Conduct Authority has issued a warning warning consumers about companies offering crypto assets without the regulator's permission, following the Financial Conduct Authority's regulatory oversight on October 8. .
The Financial Times reported that the FCA has taken tough measures despite pressure from ministers to be more lenient with companies that fail to meet all the demands of the new regulatory regime. I took it.
The regulator estimated this year that 4.97 million UK adults owned at least some crypto assets as of August 2022. When announcing the new rules, the FCA said it was introducing “regulations” as it regretted the “rash decisions” many investors made to invest in cryptocurrencies. Read the appropriate risk warnings to make an informed choice.
“Consumers should be aware that cryptocurrencies remain largely unregulated and pose a high risk,” Sheldon Mills, the FCA's executive director for consumer and competition, said in June.
James Daly, managing director of Fairer Finance, a consultancy that promotes better treatment for financial services consumers, said in a speech this week that it was “a good time” to introduce “appropriate regulation” in the sector. .
“At least now their sale is regulated, which means the FCA has issued warnings to ensure that people are deterred from providing false information,” Daly said.
Rais Khalaf, head of investment analysis at investment platform AJ Bell, said the FCA is definitely making “progress” in regulating cryptocurrencies. He said most UK investors invest small amounts in the class and see it as a high-risk bet, but they put “significant capital into the new class of currencies based on very unrealistic expectations”. He said that the investors who invested in the investment were a significant minority.
“I think those are probably the people who would expect to see some benefit from increased regulation,” Khalaf said.
The FCA’s decision to regulate the marketing of crypto investments is controversial. Some skeptics doubt that a currency whose value is based on the workings of computer-based blockchain technology has reliable long-term value.
Critics have suggested that treating these as regulated investments risks creating a “halo effect” where investors will take them seriously because regulators have clearly approved them. ing. Chris Randell, former chairman of the FCA, told the FT this month that fraud is a “feature, not a bug” of many in the crypto sector.
Other observers have suggested that placing these assets under heavy FCA regulation risks killing off useful innovation. City Minister Andrew Griffiths wrote to the FCA on October 5, shortly before the new rules were introduced, saying market participants had raised concerns about the harshness of the rules and asked the regulator for “patience” as the rules came into force. He said he asked him to show it. .
Mr Daly argued that regulation was essential. “It will be quite difficult to eliminate virtual currencies completely, so if we see the benefits of this technology, we should try to use it safely and regulate it,” he said.
The FCA said it had “extensively engaged” with the crypto-asset industry in the UK and overseas to help market participants prepare for new rules targeting how assets are promoted to consumers. It also said it offered participants “flexibility” in implementing some of the rules that required “greater technical development.”
But it added: “When businesses don't follow our rules, we remove illegal content and take steps to protect consumers.”
Some crypto investment platforms have welcomed the tightened regulations. In October, Luno announced it would suspend new customer registrations in the UK and introduce tests for existing customers to ensure they understood the risks of their investments.
It welcomed the new rules as “an important step for the cryptocurrency industry.”
“Regulation helps protect cryptocurrencies by raising industry standards and deterring malicious activity,” Luno told clients.
Michael Johnson, head of compliance at Zumo, another crypto investment platform, said that for the UK to realize its potential as a global hub for crypto technology, it needs to “provide the right regulatory regime at the right pace”. He said it would be “extremely important” to do so.
But SNP MP Martin Docherty-Hughes, who once served as the party's spokesperson for blockchain technology, said the sector needed a strong regulatory regime and the FCA was ill-equipped to provide it. Stated.
“They are like any other public sector body, extended to within an inch of their lives,” said Docherty-Hughes, MP for West Dunbartonshire. “That requires more investment and more talent at FCA.”
