UK regulator publishes proposals to regulate crypto
The UK’s Financial Conduct Authority has published proposed rules on cryptoassets which it says are the most comprehensive regime globally (Reuters/Dado Ruvic/Illustration)
Good morning, this is our last AOX newsletter of the year before we leave you all for a short break. But don’t panic! We will be back in early January.
To close out the year we thought we’d look at the Financial Conduct Authority’s proposals for crypto. The UK regulator helpfully published its consultation yesterday morning.
The FCA believes its rules are the most comprehensive globally, and it has made repeated reference to the fact that it has learnt from other regimes around the world.
David Geale, executive director for payments and digital finance at the FCA, said: “Regulation is coming – and we want to get it right.
“Our goal is to have a regime that protects consumers, supports innovation and promotes trust. We welcome feedback to help us finalise these rules.”
And these rules could have a potentially large impact on asset owners - more so than retail investors.
The UK has the third largest market globally for cryptoasset transaction volumes behind the US
and India. And based on a recent survey of firms by the FCA, institutions account for around 95 per cent of transaction value - despite accounting for less than 1 per cent of total investors.
Speaking to the media yesterday, the FCA said it was not planning on taking an interventionist approach towards institutional investors.
“There will always be an element where institutional investors will need to take their own informed decisions about their investment portfolios but that is not something new,” the FCA said.
“We are seeking to mitigate a lot of the risks but not all of the risks.”
Certainly this is reflected in some aspects of the FCA’s proposed rules.
For example, while UK retail investors will only be able to use trading platforms that are FCA-authorised, this will not apply to institutional investors.
As to how the FCA predicts its rules will change the market - and whether institutional investors will continue to make up most transactions - the UK regulator says it did not know.
Trying to predict the future “isn’t necessarily the role of the regulator”, it said.
