FCA “works closely” with government on tougher crypto rules
The Financial Conduct Authority said it was “working closely” with the government to create new regulations for crypto assets.
That’s what its Executive Director, Sarah Pritchard, said today at the FCA’s annual public meeting.
“We are considering potentially strengthening the scope of financial promotions rules, so that those who make financial promotions and promote unregistered crypto assets are brought into the regulated scope,” she said.
She added that the regulator is concerned about the lack of awareness regarding the risks of investing in crypto assets.
The FCA is also concerned about the risks to market integrity associated with cryptocurrencies.
Crypto assets: tax issues
Pritchard said, “We are concerned about the risks of financial crime, the volatility of crypto asset prices, and the difficulty in valuing crypto assets reliably.
“More generally, there are concerns that crypto assets and cryptocurrencies may be exploited by individuals seriously involved in organized crime.”
The number of people investing in crypto assets in UK is increasing. According to the regulator, at least 2.3 million people in the UK own crypto assets in one form or another.
The data also shows that around 14% of crypto investors use credit to purchase crypto assets.
Additionally, the regulator found that 12% of crypto asset holders believe crypto is somehow protected by the FCA or the Financial Services Compensation Scheme.
Pritchard said, “The FCA has a very limited mandate in terms of crypto assets and crypto asset related activities.
“This is a limited form of regulation on which we take a strong and assertive approach, but which does not provide access to FSCS.
“We try to take a firm and assertive approach because it is to this extent that we can have some influence over crypto assets and providers of crypto assets.”
To date, only 10 crypto companies have registered with the FCA. Pritchard said about 84% of registration applications reviewed by the regulator were subsequently withdrawn.
AJ Bell warned in June that tighter regulations on crypto assets are to be expected if they become more widely used.
The Online Safety Bill is a bill designed to crack down on financial promotions. The government has already been criticized for not including financial damage.
Critics say this limits the scope of the bill to tackle financial crime and want it included in the final act.
Financial promotions have been a factor in high-profile mini-bond scandals such as London Capital and Finance and Blackmore Bond.
The FCA also clarified speculation as to whether it had received whistleblower information about the two vendors.
Pritchard said: “I think, first of all, neither in the case of LCF nor Blackmore, we have received any information about whistleblowers from anyone who would be classified as a whistleblower under the Public Interest Disclosure Act, which is the legislation that governs the way in which we will assume need to be protected and their identities kept confidential.
“Our formal whistleblower processes in the FCA are designed to collect information from whistleblowers that must be protected under public interest disclosure law, and to ensure that we can handle that and provide them with that full protection.” . All of our staff are trained to identify whistleblowers, including our call center and monitoring center staff, and we take all whistleblower information very seriously.