Global reach of crypto leaves individual regulators powerless, FCA boss warns
The global reach of cryptocurrencies has left individual regulators unable to shield consumers from mis-sold investments and dodgy products, the chief of the UK’s financial watchdog has warned.
In a speech today, Nikhil Rathi, chief executive of the Financial Conduct Authority, said the FCA cannot protect customers from firms that do not meet the UK’s standards, as they are able to swoop in and reach customers from abroad.
“Firms we reject can still service UK customers from offshore,” Rathi told City bosses today.
“While we have been encouraged to see partner agencies follow our lead when we have rejected firms’ registrations, it is not enough to rely on our global influence. This needs wider consideration by policymakers.”
The lines between investment and unregulated gambling had become blurred, Rathi said, with a majority of adults unaware that crypto assets sat outside the watchdog’s jurisdiction.
“If you invest in crypto, you need to be prepared to lose all your money,” he warned.
Government has been looking to woo more crypto firms into the City with a batch of fresh measures announced last month, including bringing stablecoins into the UK’s regulated payments network.
But the FCA has been ramping up scrutiny and looking to clamp down on malpractice by UK firms. The watchdog requires firms to register with the regulator under anti-money laundering rules.
Cryptocurrencies are increasingly falling under the eye of regulators and central banks globally. A top official at the European Central Bank yesterday launched an attack on the crypto ecosystem, describing it as a “lawless frenzy of risk-taking”.
“Crypto assets are speculative assets that can cause major damage to society,” Panetta said.
“At present they derive their value mainly from greed, they rely on the greed of others and the hope that the scheme continues unhindered . . . until this house of cards collapses, leaving people buried under their losses.”