Brexit’s Surprising Side-Effect: Stiffer Bitcoin Regulations
By CCN: The prolonged process for withdrawing from the European Union may have resulted in great uncertainty, but the UK’s financial watchdog is sure about what it wants post-Brexit – more muscle to oversee bitcoin and the crypto industry at large.
According to the Financial Conduct Authority’s business plan for 2019/2020, the regulator will urge Her Majesty’s Treasury to boost its enforcement powers in the crypto sector ahead of Brexit. Per FCA’s chief executive, Andrew Bailey, UK’s EU withdrawal is the body’s most pressing and urgent challenge.
Andrew Bailey on our Business Plan 2019/20 https://t.co/4Juptx0QcY pic.twitter.com/d5guGsyJtV
— FCA (@TheFCA) April 17, 2019
The financial watchdog intends to first hold public consultation first, though, before its enforcement powers can be increased:
“Following our consultation on cryptoassets we will publish a Feedback Statement and finalised Perimeter Guidance. We will also provide technical advice to the Treasury on extending the perimeter for utility and exchange tokens and on extending our financial crime provisions to certain activities related to cryptoassets.”
Is FCA Too Eager to Regulate Bitcoin?
The FCA’s research agenda for 2019/2020 will also touch on the technology underpinning cryptoassets – blockchain. Per the FCA, distributed ledger technology is evolving so fast that there is a need to identify its potential benefits and risks with a view of shaping “regulatory interventions.”
Some of the potential risks identified by the FCA include anonymous transactions being used to commit financial crimes. Additionally, the FCA has expressed worries that quantum computing could impact the security of cryptocurrency networks.
If past research conducted by the FCA is anything to go by, the financial watchdog might overzealously enact crypto regulations. Survey results released last month indicated that most cryptoasset owners in the UK had purchased bitcoin or one of its peers hoping to get rich quickly.
Retail Crypto Investment Driven by Hype and Peer Pressure
Friends, acquaintances, and social media personalities largely influenced the purchasing decisions, according to the survey. Additionally, a significant number of crypto owners had forgotten to DYOR (Do Your Own Research) before making purchases.
At the time, FCA’s Christopher Woolard did not hesitate to warn consumers against the dangers of purchasing assets they knew little about.
🗨️Christopher Woolard: 'Cryptoassets are complex, volatile products – consumers investing in them should be prepared to lose all of their money.'
➡️See our information for consumers on #cryptoassets: https://t.co/TcneroQv3c pic.twitter.com/Ts5LY4xArx
— FCA (@TheFCA) March 7, 2019
To protect consumers, one of the measures the financial watchdog has already taken is limiting trading leverage on cryptocurrency derivatives to 2:1.
And in the final report of UK’s Crytpoassets Taskforce, of which the FCA, Bank of England, and UK finance ministry are members, the financial regulator warned that it would consult on prohibiting the sale of all “derivatives referencing exchange tokens such as Bitcoin, including CFDs, futures, options and transferable securities.”
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