Latest Financial Conduct Authority News

In the grand scheme of things, Cryptocurrency is new to the world of finance and investment, which is probably why there is still a lack of regulations surrounding the buying, selling and trading of it. However, as it increases in popularity the risk of people finding that their investment isn’t what it seems is also on the increase. It is this risk to consumers that is likely to be behind the Financial Conduct Authority (FCA) pushing for strong regulation and more support in terms of Cryptocurrency ownership in the UK. Not having this sort of regulation is what attracted people to crypto in the first place, and many investors fear that this could turn the tide of crypto in the UK entirely, leading it to be an industry as heavily regulated as casino offers and the gambling industry. 

The recent round of cryptocurrency regulations that were introduced at the beginning of 2020 enabled the FCA to work with and monitor businesses in the sector and apply anti-money laundering and terrorist financing regulations to their trading models.

Crypto businesses were given just over a year to make their applications for a temporary registration regime, a stern reminder that not complying with the need to register and continuing trading activities could be made a criminal act.

The Latest Cryptocurrency News

With its latest announcement that the number of crypto businesses in the UK without registration still exceeds registered entities over 2 years later indicates that something is preventing the fast adoption of these 2020 regulations. They are of course currently being adopted and the list of registered concerns has slowly grown with the latest crypto company to confirm registration, crypto.com, bringing the total up to 37. These newly registered businesses now benefit from the authority’s approval to offer their services within the UK.

But the fact remains that only 7 crypto businesses have been approved with regard to money laundering regulations this year. Although the list contained larger players in the industry like eToro UK, the FCA has compiled a list of those companies who do business currently with no registration with the authority in regard to anti-money laundering legislation. The exhaustive list contains examples of companies involved with crypto alongside those that offer foreign exchange services.

At present, the Financial Conduct Authority does not have the powers to provide consumer protection, or indeed the ability to oversee the complete crypto industry. But the authority has indicated that the standards it requires for successful registration were set to provide investors with a safe trading environment while continuing to support the innovations promised from within the industry.

It seems that the Financial Conduct Authority will continue to implement the registration regime and ensure that the minimum standards are achieved to prevent the possibility of criminals seeing a way to launder funds.

With the FCA admitting it lacked the necessary legislative teeth to bear down on operators who currently trade unregistered within the UK. A spokesman for the authority recently vocalised a reminder that the UK Parliament ultimately sets the regulatory boundaries and lays down the extent of the authority’s application of current regulations.

Keeping Investors Safe

One thing that regulators like the FCA will be keen to do is to ensure that investors are kept safe. Whilst no one can guarantee losses won’t occur, the latest research shows that price crashes are failing to deter young, inexperienced investors. With Cryptocurrency investments now showing to be almost as popular as more traditional investment methods it stands to reason that there is going to need to be some rulings put in place – for example, how much can someone invest at one time and whether a platform should be licensed before they are allowed to offer Cryptocurrency trading services. 

Recent research by WisdomTree shows that around 27% of British adults aged between 18 and 30 are now investing in Cryptocurrency, which means that having regulated platforms and an official set of rules put in place makes sense. 

Without guidelines in place, anyone in theory can start a Cryptocurrency exchange app, ask for deposits and not invest the money as they promised. Currently, there is no protection against this, whereas regulation could mean that money is protected in a similar way to a bank account and the £85,000 that the FSCS protects for consumers throughout the UK

Whether the regulation will fall under the FCA, the FCSC or a new Cryptocurrency organisation is something that will need to be discussed and if currently gambling discussions are anything to go by, this could be a lengthy process. 

The Future Of Cryptocurrency Regulation

The recent news that a proposed bill thought to be being brought before parliament in September may lead to new UK regulatory powers bringing stablecoins under local payments regulation. But no details have emerged on what form that could take.

The proposed stablecoin rules form a piece of the wider-ranging financial services and markets bill, a piece of legislation defining the UK’s economic strategy with regard to its independence from the EU. Although there are mixed opinions as to whether Cryptocurrency should be included in any future legislation and regulated, most people recognise that there are likely to be some rules put in place in the future. We’re probably some way off from the industry being fully regulated but with the UK Government making steps towards recognising Stablecoin as a currency and being rules surrounding this there are definite changes happening. It is hard to say exactly what regulation we are likely to have in place in the future but regulators and industry experts are likely to be pushing toward regulations that help to keep investors safe. There is nothing to be able to guarantee that any investment will go up in value, but security steps in place to ensure that people’s money is as safe as possible will likely be introduced in the future – in a similar way to how the casino and online gambling industry is regulated by the UK Gambling Commission.