NEWS & VIEWS
FSL’s Chain Mail is a regular blog containing links to news articles that we think are worth sharing.
With experts predicting 2022 as a watershed moment for the adoption and institutionalization of cryptocurrency within global financial markets, the latest statistics from the Financial Ombudsman Service show an increase in the number of people affected by online fraud and scams. In particular, a significant rise in the number of complaints about cryptocurrency scams. In this edition of chain mail, we examine the latest government proposals regarding cryptocurrency regulations.
According to the Financial Times, the Financial Conduct Authority (FCA) intend to take over responsibility for cryptocurrency advertising, as the government intends to tighten the rules for advertising high-risk investments. The proposal also includes banning payments to new customers who sign up or refer their friends, toughening the phrasing of risk warnings on adverts and tightening rules for how promotions are approved before publication. The measures have been proposed after warnings from Sir Jon Cunliffe, the Deputy Governor at the Bank of England, that cryptocurrencies could trigger a financial meltdown unless the government toughens regulation.
Ian Taylor, executive director of CryptoUK in an interview with CoinDesk states the UK’s current regulatory climate towards cryptocurrency is a “Catch 22” since the presence of a trusted and respected regulator like the FCA is one of the reasons firms may choose to set up in the UK, however, he adds “we will lose a lot of innovators in the UK if this FCA rhetoric continues”. As a result, he is urging the government to help foster innovation in areas like decentralized finance (DeFi) by allowing algorithmic stablecoins to exist in a category of their own, like utility tokens.
Speaking with Bloomberg, Walid Koudmani views the new laws and regulations as beneficial for the crypto market, as it “may be a clear indication that the UK government intends to regulate a market that appears to be unstoppable and inevitable due to increased mass adoption”. He also adds, “it could ultimately encourage new investors to join as it would eliminate one of the main barriers to entry that some encounter, lack of regulation”.
Further commentary on the subject comes from Susannah Streeter from Hargreaves Lansdown. Speaking with AltFi she believes regulation may be needed as the Treasury estimates that 2.3 million people in the UK own a crypto asset with popularity rising in tandem with a declining understanding of what crypto actually is. Lastly, Laura Suter, Head of Personal Finance at AJ Bell, thinks that ultimately the regulation will help individuals but it doesn’t go far enough – “While the move will help some people, it won’t stop the outright scams that have exploded off the back of bitcoin and other cryptos soaring in price. What would have a far bigger impact is cracking down on social media accounts where people claim to have made their millions from buying bitcoin, most of which are ultimately scams or glorified pyramid schemes”.
Look out for our next edition with more FSL Chain Mail links.