People must be “prepared to lose all their money” if they invest in crypto, Nikhil Rathi, CEO of the UK’s financial watchdog, said in its yearly review meeting.
The Financial Conduct Authority (FCA) used the online public meeting on Wednesday to repeat the message it has pushed for several years, while also recapping the regulatory measures it has taken to protect investors.
Responding to questions from journalists and members of the public, the FCA admitted that, current crypto policies are limited beyond gating anti-money laundering restrictions.
These restrictions have still been severe enough that many crypto companies have failed to make the cut — and several firms have decided to shut down their UK operations as a result. While an FCA representative mentioned they support 39 firms based on decentralized ledger technology, there are 246 crypto asset companies currently operating in the UK that are not registered.
The panel of financial executives also expanded on what’s on their agenda regarding crypto regulation in the UK.
Sarah Pritchard, the executive director for markets at the FCA, outlined three entry points for regulating crypto. Firstly, as a high risk investment, she reiterated that people do not understand the gravity of the risk of losing all their money to crypto.
The financial supervisor is reminding consumers of this risk through a “scam-smart” campaign to warn consumers. Measures to tackle scam in advertisements are also included in the latest Online Safety Bill.
The system for tackling fraud in the UK is complex and under-resourced, costing the nation £130 billion ($144 billion) a year, according to Richard Lloyd, the interim chair of the FCA as of February this year.
Secondly, for tackling crypto as a means of payment, Pritchard pointed to the FCA’s collaboration between the Treasury and Bank of England to bring out legislation to allow stablecoins to be used as payments.
Finally, the FCA also recognized the “potential” and “benefits” of blockchain technology in market innovation. Two programs in particular aim to reflect this — namely Innovation Pathways, which guides financial firms launch innovative products, and the Regulatory Sandbox, which lets first test innovative proposals with consumers.
Correction: The number of firms on the FCA's crypto-asset register was updated after publication.
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