FCA to Provide Further Guidance to Firms Conducting Crypto Asset Activities
By Mark Lemon – Cryptocurrency Specialist
On 23rd January the Financial Conduct Authority (FCA) announced that it will be consulting on crypto asset guidance to set out the ways that activities such as buying and selling crypto can be regulated. The direction from the FCA will provide further understanding on how Bitcoin trading for companies can be regulated.
Businesses will have guidance to identify if their crypto assets will be under regulation from the FCA. This will provide them with a better understanding on what will need to be authorised and will confirm if they are compliant and have the right safeguard measures in place.
There have been industry requests to gain more clarity due to the popularity of businesses investing in cryptocurrency. This will help provide safer measures with buying and selling Bitcoin. The FCA’s Executive Director of Strategy and Competition has said, “This is a small but growing market and we want both industry and consumers to be clear what is regulated, and what isn’t. This is vital if consumers are to know what protections they’ll benefit from and in ensuring we have a market functioning as it should.”
Numbers are increasing in people investing in cryptocurrency assets. The FCA need to ensure that people are cashing out crypto correctly and are aware of the risk of losing money. There are many crypto asset services that are not included in the FCA’s regulatory remit and customers need to be aware of the limited regulatory protection. Buying and selling Bitcoin online has a lack of protection under the Financial Services Compensation Scheme and the Financial Ombudsman Service.
The FCA can see the potential benefits in crypto assets and clarity on the risks will be great for the market and consumers. This is a step in the right direction to encourage innovation in the right technology. There will be further consultations on banning the sale of derivatives that have been linked to types of retail investors. The government are engaging in further work to broaden their regulatory perimeters on crypto activities too.
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