UK’s top regulator admits being powerless to oversee crypto

The Financial Conduct Authority has limited authority over cryptocurrencies and other similar digital assets, according to its Chair

Speaking at the Cambridge International Symposium on Economic Crime yesterday, the Financial Conduct Authority (FCA) chairman Charles Randell discoursed at great lengths on regulatory efforts. Randell implied that the regulatory body does not have adequate power to execute the appropriate regulatory action.

He compared the FCA to the US Securities and Exchange Commission (SEC), which maintains that almost all digital tokens are securities save for the top two cryptocurrencies, Bitcoin and Ether. While the SEC hasn’t needed a mandate from Congress to manage these assets in the past, the FCA requires permission from the UK Parliament.

Randell noted, “The FCA currently has a limited role in registering UK-based crypto-asset exchanges for anti-money laundering purposes.”

He also referenced Hercules’ Augean stables, observing that the internet had seen a build-up of problematic content that needed cleaning up. The FCA, in his opinion, needed to pursue appropriate regulations and push for consumer awareness to fight the scourge of online financial scams.

As far as crypto scams are concerned, Randell cited what he thought might have been the farthest-reaching financial advert in history – Kim Kardashian’s recent Instagram post. The American socialite was reportedly paid to advertise Ethereum Max to her huge Instagram following. Randell observed that unknown developers created the token just a month earlier, while not categorically classifying the token as a scam.

He averred that such influencers generated hype that pushed the younger public into investing without much understanding of the risks involved. He added that advertisements and promotions should not give the impression that a token is regulated, highlighting how misleading these adverts could be. He asked for caution, given that crypto scammers often use celebrities for promotion, eventually leading to pump and dump moves that leave consumers high and dry.

The UK Treasury is said to be working on a proposal that grants the FCA jurisdiction to regulate the promotion of assets as in traditional financial markets. Randell went on to clarify that from the FCA’s point of view, any tokens that could be authorised to operate would have to satisfy certain minimum requirements.

His comments come not long after the FCA revealed it is “not capable” of supervising Binance. This is despite having reported that the exchange isn’t compliant with all regulations.

Even with its limited ability to authorise crypto firms to operate in the UK, the FCA chair recognised the positive use cases that crypto presents. He lauded the improved underlying technology, which he felt would positively impact the efficiency around payment systems.