chairman of the UK’s Financial Conduct Authority (FCA) delivered a speech on cryptocurrency regulations, including risks and rewards.
Earlier today, the head of the UK financial regulator issued a speech called ‘ Risks of Token Regulation’.
talk focuses on the current state of token regulation in the UK, the risks and benefits of regulation, and the role of the FCA. However, the talk begins with an example of Kim Kardashian’s Instagram crypto hack. Speech uses this as an example of crypto scams.
Regarding the role of FCA, the speech says that for the moment there are limits. regulator only deals with exchanges for anti-money laundering purposes. Much of the regulatory debate has focused on consumer protection as the ultimate goal.
“We will pursue our goal of protecting the consumer by limiting harm. That is why we prohibited the sale of crypto derivatives to retail consumers last year.
For now, the UK has no general regulations on the issuance or authorization of speculative tokens, which is the classification of cryptocurrencies. speech goes as far as to say that any additional regulation would validate cryptocurrencies as an investment. Will FCA’s participation give them a ‘halo effect’ that creates unrealistic expectations of consumer protection?
According to the regulator, the FCA will not authorize activities that cannot explain the basic concepts of the organization and operations. In other words: who is in charge. This leaves the waters very unclear for decentralized exchanges (DEX) and other DeFi projects.
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Advantages of regulation
Despite all the talk about scams and clarity in the crypto industry, the speech mentioned some positives. Mainly, it lies in the technology behind cryptocurrencies and payment efficiency. stablecoins have received specific accolades.
“re are promising use cases for retail and wholesale payments, especially cross-border retail payments, where friction costs can be high for some of the most financially excluded people in our society.”
For the moment, he says that UK regulators have the ability to act in two ways. Cryoto asset promotions and preventing the spread of unregulated assets from working with regulated ones.
It is clear that the UK has a watchful eye on the cryptocurrency industry. Last week, the cryptocurrency exchange Coinpass received official approval from the FCA. However, if regulators continue their hesitant stance on the sector, despite good intentions, UK crypto companies could suffer. Some crypto-centric companies have already ceased operations amid bans and regulations.
Ultimately, says the FCA, “good financial regulation supports innovation, productivity and economic growth.” Regulators hope for a balance that benefits all parties.
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