FCA Discuss Crypto at Annual Public Meeting
The FCA held it’s annual public meeting last week, on 12th October. The public meeting is an online opportunity for the anyone to pose questions to the FCA to respond.
During the meeting, a question was raised for the FCA to clarify it’s position and approach to crypto. The FCA confirmed that given the limited regulatory reach the FCA has over the crypto markets, its main task as a regulator is the assessment of the MLR standards. This is no small feat, given the differences in financial crime monitoring within traditional payment systems when compared against the new techniques required to monitor and assess risk within the blockchain.
A large part of the approach of the FCA was focused on cryptocurrency as an investment asset type. The FCA are very aware of the recent issues highlighted by mis-selling of financial promotions and the focus on themselves to improve the level of regulatory oversight over such schemes, with new rules coming towards end of the year to regulate high risk investments. As such, it shouldn’t come as a surprise to anyone that the FCA wanted to emphasise to consumers of the high-risk nature of crypto, warning that investors should be prepared to lose all their money in such schemes.
Looking to the future and to assist investors, the FCA highlighted the ‘Invest Smart’ campaign (link below) as part of the FCA’s efforts to inform the public and provide a guide to managing the risks of investments. On this front, crypto promotions, like other types of high-risk asset investments, will be put into FCA remit soon. On the technology front, the FCA highlighted that it supported innovation through its regulatory sandbox, and was working with companies to develop the necessary financial regulatory infrastructure.
The FCA also pointed to HM Treasury plans to introduce stable coins to assist as a means of secure payment. To its detractors, this course of action is arguably contradictory to the very premise of distributed ledger technologies. To it’s supporters, the introduction of a Central Bank Digital Currency provides a level of stability that will open Distributed Ledger Technologies to a mass audience and increase the range of supported products.
If you want to see the Public Meeting, a recording can be found here: https://www.fca.org.uk/events/annual-public-meeting-2022
And for anyone interested in learning more about high-risk investments, can find it here: https://www.fca.org.uk/investsmart
