Financial regulator warns UK against rushing to create ‘crypto hub’

The chairman of Britain’s financial regulator has warned of a rush to add crypto markets to the agency’s mandate after the government launched an ambitious bid to hammer out new regulations and make the UK a hub for cryptography.

Charles Randell, chairman of the Financial Conduct Authority, called for “realism” about how long it would take the regulator to prepare to oversee issuers and traders of “purely speculative crypto tokens,” and how much crypto firms should improve before they can be officially cleared.

He also underscored the importance of the FCA’s independence at a time when some crypto industry players have urged the government to pressure the regulator to be more accommodating to digital assets.

“It is essential that . . . there are strong safeguards to ensure that all interests — not just the interests of people who make money pushing crypto products, but also the interests of people whose savings will be put at risk — are heard,” said Randell in a speech Friday. . “This requires a strong and independent financial conduct regulator.”

The FCA chairman, who is expected to step down this spring, also said it was unclear how the regulator would pay the “very significant costs” of adding crypto oversight to its responsibilities.

Randell’s comments follow a speech by Treasury Secretary John Glen in April, which outlined the government’s ambition to make the UK “the best place in the world to start and grow crypto businesses.” .

Glen said the government was determined to attract global crypto players to set up shop in the UK, a plan that would include new regulations and likely mean giving more powers to the FCA.

The offer to compete with rival crypto hubs, such as Switzerland and Dubai, has been met with skepticism by digital asset firms. Many UK crypto entrepreneurs believe the FCA is relentlessly opposed to digital assets, and crypto companies have clashed with the regulator over how it has implemented money laundering controls.

Randell said the regulator is open to innovation, including using distributed ledger technology and the potential of properly regulated stablecoins — crypto tokens pegged to traditional assets like the U.S. dollar — to “reduce costs and friction” in the payments industry and shake up the industry.

However, Randell questioned the goal of overseeing more speculative cryptocurrencies. “Should people be encouraged to believe that these are investments, when they have no underlying value?” he said.

“When the price of Bitcoin can easily halve in six months, like it did recently, and some other speculative crypto tokens drop to zero?” he added.

Randell said he was opposed to the inclusion of crypto firms in the financial services compensation scheme, which would mean that money collected from regulated financial firms would be available to compensate their customers. The financial services industry as a whole should not be “exposed to the costs of failing crypto firms,” ​​he noted.

The FCA Chairman, who has previously spoken about the need to control crypto advertising, returned to the subject of endorsements by entertainment personalities.

“With celebrities as varied as Kim Kardashian and Larry David willing to take the cash to promote speculative crypto, how do you curb people’s enthusiasm for doing something that could seriously harm their financial lives?” he said.

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Financial regulator warns UK against rushing to create ‘crypto hub’

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