According to its chairman, the Financial Conduct Authority has limited authority over crypto-currencies and similar digital assets.
Speaking at the Cambridge International Symposium on Economic Crime yesterday, Financial Conduct Authority (FCA) chairman Charles Randell spoke at length about regulatory efforts. Randell suggested that the regulator lacks adequate authority to implement appropriate regulatory measures.
He compared the FCA to the US Securities and Exchange Commission (SEC), which argues that almost all digital tokens are securities, with the exception of the two major crypto-currencies, Bitcoin and Ether. While the SEC has not needed a congressional mandate to manage these assets in the past, the FCA needs authorization from the UK Parliament.
Randell noted that “ the FCA currently has a limited role in registering UK-based crypto asset exchange platforms for anti-money laundering purposes.”
He also referred to the labours of Hercules, observing that the internet had seen a build-up of problematic content that needed to be cleaned up. According to him, the FCA needs to put in place proper regulation and raise consumer awareness to combat the scourge of online financial scams.
When it comes to crypto-currency scams, Randell cited what he believes may be the most ambitious financial ad in history: the recent Instagram post by Kim Kardashian. The American socialite was reportedly paid to advertise Ethereum Max to her many fans on Instagram. Randell observed that unknown developers created the token just a month earlier, while not categorically classifying the token as a scam.
He claimed that these influencers generated hype that pushed the young audience to invest without much understanding of the risks involved. He added that advertisements and promotions should not give the impression that a token is regulated, pointing out how misleading such advertisements can be. He called for caution, as crypto-currency scammers often use celebrities for promotion, which ultimately leads to pump and dump moves that leave consumers completely unprepared.
The UK Treasury is reportedly working on a proposal that would give the FCA the power to regulate the promotion of assets as in traditional financial markets. Randell went on to say that, from the FCA’s perspective, any token that might be allowed to operate would have to meet certain minimum requirements.
His comments come shortly after the FCA <a href=”https://www.ft.com/content/17620a3b-b82d-4b85-aa85-4cf2793b7a02″ target=”_blank” rel=”noopener”>revealed that it was “not capable” of supervising Binance. This is despite the fact that it reported that the exchange platform was not in compliance with all regulations.
Despite its limited ability to allow crypto-currency companies to operate in the UK, the FCA chairman acknowledged the positive use cases for crypto-currency. He welcomed the improvement in the underlying technology, which he said would have a positive impact on the efficiency of payment systems.