By Mark Ackman
While speaking at its yearly review, the CEO of the UK’s financial conduct authority (FCA), Nikhil Rathi, said that people that invest in crypto must be ready to “lose all their investments.” UK’s financial watchdog capitalized on the online public event on Wednesday to stand by the message it has been repeating for many years. However, it also repeated its regulatory steps to protect investors.
The FCA told the media and the public that current crypto regulations are only limited to preventing anti-money laundering activities. Despite being tasked with one responsibility, many crypto firms have shut down their UK operations because they were unwilling to abide by these anti-money laundering regulations.
An FCA representative stated that only 56 blockchain technology firms are registered with the financial watchdog. However, he noted that 246 unregistered crypto firms are still operating in the UK.
Three entry points to crypto regulation
The FCA’s executive director for markets, Sarah Pritchard, opined that there are three entry points for crypto regulation. First, people need to understand the meaning of crypto as a high-risk investment. Pritchard explained that investors could lose all their money and can’t seek justice from the government or the judiciary.
The financial supervisor said this lack of understanding is why she is launching a “scam-smart” campaign for greater awareness and to warn potential crypto customers. She added that the latest online safety bill includes measures to tackle advertising scams.
Former interim chair of the FCA, Richard Lloyd, said there is a complex and under-resourced system for tackling fraud in the UK. Hence, the country is losing 130 billion pounds yearly. Pritchard noted that the second entry point is to solve the crypto payment method problem.
She said the FCA is working with the Bank of England and the Treasury to issue a regulation for using stablecoins as a payment method. Nonetheless, the FCA recognizes that blockchain technology has immense potential and benefits in market innovation.
Two FCA programs reflect that line of thought. There is the Innovation Pathway which assists financial firms in launching innovative products. Also, there is the Regulatory Sandbox which allows consumers to test the first innovative proposals.
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