FCA launches consultation on crypto-asset regulation
The UK’s financial watchdog is launching a consultation on crypto-assets such as bitcoin and other digital tokens to determine which activities it regulates.
There has been a surge in interest for digital assets in recent years, and the Financial Conduct Authority said "an increasing number of consumers" were investing. But the market is still both new and small, and regulators and operators worldwide have yet to establish which assets fall under which financial regulations.
Under the consultation, the FCA will categorise which assets it regulates, allowing firms and consumers to have a better understanding of what assets and related trading activities need to be authorised.
It will then invite feedback from the industry and wider public on its guidance.
Christopher Woolard, executive director of strategy and competition at the FCA, said: “This is a small but growing market and we want both industry and consumers to be clear what is regulated and what isn’t. This is vital if consumers are to know what protections they’ll benefit from and in ensuring we have a market functioning as it should.”
The FCA said that while crypto-assets have “the potential to bring benefits to markets, firms and consumers, there remains considerable risks to markets and consumers”. The value of bitcoin has surged since it was launched, at one point hitting highs of nearly $20,000. But last year saw it tumble, prompting concerns over how the market is regulated. It currently trades under $3,000.
Other potential reforms include a possible ban on the sale of derivatives linked to certain types of crypto-assets to retail investors, which the FCA will consult on later in the year, and the government’s planned consultation on whether to expand the regulatory perimeter to include further crypto-assets activities.