Is It Time For The FCA To Tighten Crypto Regulation?

Is It Time For The FCA To Tighten Crypto Regulation

In the recent past, prolonged Crypto markets bears and risks that are associated with Crypto investments are prompting conversations of whether the Financial Conduct Authority (FCA) of the UK should rethink its approach to Digital Assets management. Questions about necessity, possibility, and end result are now prominent and experts are divided on opinion and aftermath.

The significance of Crypto markets environment in the UK is that being a member of the G20, the G8, the Commonwealth, etc., the country is a point of reference for policymakers in nations across the world. Hence, the FCA decision is likely to have a worldwide impact on Crypto markets across the globe in the like the US SEC or Japan’s FSA.

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Crypto Regulations, A Healthy Balance?

In mid-September, a group of MPs called for more action from the FCA in regulating Crypto markets. This came following an initiative from a UK Treasury Committee to create a healthy balance of Crypto usage.

On their report submission, the policymakers claimed that Cryptos have no “no inherent value,” in addition to being “vulnerable to manipulation.” According to them, these factors justify urgent regulation particularly to check ICOs that can be exploited to defraud investors.

Consequentially, many concerns have emerged surrounding the assertions from the lawmakers as not everyone is agreeing with a need for a more stringent regulation. Further, some experts may want to protect Blockchain technology from any detrimental regulation given that Crypto regulation is likely to have an inversely proportional effect on the emerging DLT.

In Europe, Cryptos Are Unregulated But Their Usability Is Regulated

The CFO at Crypterium, James Davies, who is a derivatives markets expert and a long-term financial technology specialist told Finance Magnates that regulation in Europe and the UK is different. For instance, the laws are silent on Cryptos and instead target their usability in areas such as payment, fundraisings (ICO), and futures services.

Therefore, Davies says that the likely direction that the FCA should take ought to consider regulations that promote Cryptos and Blockchain technology. Further, Davies speculates that Digital Assets will be treated as financial market securities rather than currencies. In regards to other Crypto-related challenges such as money laundering, the AML rules are likely to be strengthened to clamp down system misuse.

Crypto Regulation In The UK Will Be Ideal For Removing Anomalies, But Opinion Is Divided

Doubtlessly, the days when Western governments issued a blanket ban on Cryptocurrencies are over following an increased public interest in Digital Assets. Also, the steadily rising demand for Blockchain-based solutions for institutions is likely to prompt the FCA to create policies that change the perception of the ‘wild west’ in Blockchain and Cryptos matters.

Akin Fernande of Aztec believes that regulation will be a chance for the UK government to gain control over the public Cryptography key similarly to the SSL that secures browsers. However, he feels that regulation is not advisable as it may hamper positive progress in the nascent technology and industry.

On the other hand, a European Partner at Cosimo Ventures, Connor Cantwell, believes that more individuals and high-level institutions such as Banks will invest in Cryptos with more regulations.

Due to the divergent views, it is only evident that much research has to be done in the UK Crypto and Blockchain industries before the FCA or the parliament acts.

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