FCA to be given more power to regulate cryptocurrencies
The Treasury says current safeguards intended to protect retail investors in cryptocurrencies are inade…
21st July 2020 12:04
by Tom Bailey from interactive investor
The Treasury says current safeguards intended to protect retail investors in cryptocurrencies are inadequate.
The Financial Conduct Authority should be given the power to regulate cryptocurrency adverts and promotion, according to the Treasury.
Cryptocurrencies are digital tokens, with the most famous example being bitcoin. In recent years, the price of bitcoin and similar cryptocurrencies has fluctuated wildly, attracting increased attention.
As a result, there has been an increased appetite for investing in the bitcoin and similar currencies among the public, with many seeing it as a potential way to get rich quickly. As expected, this has led to a proliferation of scammers offering cryptocurrency-related services and products.
John Glen, the UK’s Economic Secretary to the Treasury and City Minister, notes: “It’s important that people can understand the financial products they see promoted. If adverts by unauthorised firms are misleading, or don’t fully outline the risks, then people can end up losing money. That’s why we want to put more protections in place around such financial promotions, including the promotion of cryptoassets, while continuing to ensure people have access to a wide range of products on the market.”
According to Laura Suter, personal finance analyst at AJ Bell, the City watchdog has previously complained that they were unable to regulate cryptocurrency properly. She notes: “The FCA has previously said that its hands were tied in some of its work on cryptocurrencies, as it didn’t have the power to regulate much of the market – but this move will change that.”
With this in mind, the Treasury, in recently published consultations, noted that current safeguards intended to protect retail investors in cryptocurrencies were inadequate.
As a result, the Treasury has recommended that the promotion of cryptocurrency should fall under the FCA’s regulations and the regulator be given more power over firms involved in the market, as well as the advertisement and marketing of cryptocurrency services and products.
This article was originally published in our sister magazine Money Observer, which ceased publication in August 2020.
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