The UK’s financial regulatory body, The Financial Conduct Authority (FCA), has set its sights on crypto in a week filled with news on crypto regulation. The FCA is actively recruiting someone to lead them in building a team focused entirely on digital assets.
A bullish signal for crypto
Whilst many will turn their noses up at the idea of crypto regulation, this is highly bullish for crypto as a whole. Following news from both the US and EU that digital assets are being integrated into the global financial system illustrates that the FCA is warming to crypto. It seems that we are now well past the days of worrying that governments worldwide are going to ban crypto outright.
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The goal of the new Head of Department role is,
to build and lead a new crypto department that will lead and coordinate the FCA’s regulatory activity in this emerging market.
The content of the job listings reveals that they are not looking to hire someone to justify cracking down on crypto. Instead, they focus on building a “supervisory framework to manage complex, novel and precedent-setting cases”. This statement is unmistakably accurate. Crypto and blockchain technology as a whole is highly complex, with a vast array of different consensus mechanisms, asset classes, and structures. Current regulation is fundamental and almost entirely outdated since we rely on fiat regulatory policies conversions. The UK Government admits that most cryptocurrencies lie outside of the regulatory perimeter. With “around 2.3 million people in the UK are now thought to own a cryptoasset”, it is about time the FCA put a proper department in place to give crypto the credit it deserves.
What does this mean?
The listing also reveals the FCA is focusing on “supervising innovative and complex business models of registered firms and dealing with unregistered cryptoasset businesses that may be involved in scams and frauds.” Interestingly, fiat currency is also no stranger to scams and fraud. In fact, in 2020, in the UK alone, £1.26 billion was lost to fraud through payment cards, cheques, remote banking, and authorized push payment scams. Further, for an industry repeatedly criticized for its role in fraud cases, the total loss to crypto scams in the same year was around ten times less than fiat scams.
Protecting investors is the main focus of the FCA it is no surprise they are looking to create proper policies around crypto. It does, however, open up the question of how the FCA will handle crypto services registered outside of the UK following this appointment. Will companies be required to register in the UK in order to be allowed to trade crypto to UK citizens legally? Popular stock trading companies such as WeBull are unavailable to UK traders due to the complexity of UK regulations. Could we see Coinbase, Binance, and others pull out of the UK in the near future? Binance Markets Limited, the company’s UK arm, has already had issues with the FCA, and they have not yet started trading. The Binance UK website still displays only a message requested by the FCA stating,
Binance markets limited is not permitted to undertake any regulated activities in the UK.
A careful look at the entire job listing does not ultimately inspire confidence. There are three tiers of requirements; minimum, essential, and desirable. The FCA only lists having any knowledge of crypto in the bottom tier. The role, therefore, may ultimately be filled by someone with little to no experience in the crypto industry. Let’s hope we don’t get someone who doesn’t know the difference between proof of work and proof of stake consensus mechanisms.
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