Major Regulators Like The FCA Look To Legislate Cryptocurrency
The crypto industry’s presence is undeniably more widespread than in its early days. While revolutionary potential has shaped more ideas and approaches, it has also increased the space for frauds and scams, resulting in significant losses.
Tightening enforcement is the inevitable result of a series of scandalous events. Cryptocurrency and high-risk investments are slightly different.
In a press release published on Monday, the U.K.’s Financial Conduct Authority (FCA) has stepped in to tighten high-risk investments’ regulations with a set of new rules.
The regulatory agency stated that strong rules for cryptocurrency will be soon introduced.
FCA is Looking for A Wider Scope
The FCA targets marketing activities as a priority, aimed at strengthening customer protection against illegal acts linked to high-risk investments.
The rules require a sufficiency of clarity over risks associated with investing in an instrument. Additionally, investment incentives like referral bonuses are illegal under the FCA’s new regulations.
“We want people to be able to invest with confidence, understand the risks involved, and get the investments that are right for them which reflect their appetite for risk,” said Sarah Pritchard – the FCA’s Executive Director of Markets.
The rules do not directly impact crypto promotions but the agency has warned about tightening cryptocurrency regulations, sooner or later.
For the UK regulators, the impression of crypto is unlikely positive and digital assets always come with relatively high risks. According to their statement, investors need to acknowledge high-risk factors linked to crypto assets before jumping on board.
A Long Time Coming
The UK government previously put the monitoring power in the hands of the FCA and it did not take too long for the agency to take action.
In March, Bitcoin ATMs were ordered to ban. Cryptocurrency advertising activities have also been under the radar of the Advertising Standards Agency. In March, an enforcement notice was published, requiring crypto firms to clarify the market volatility to customers and to stop making use of novice investors.
Too many warnings will soon turn into actual implementation and the crypto promotion services, as stated by the FCA, will soon be strictly regulated.
Crypto scams and other criminal activities have always been the biggest concerns of global governments.
The U.S. authorities have long called for stricter control over cryptocurrencies. The Federal Bureau of Investigation (FBI) warned people about scammers using ATMs to carry out a high-tech wire transfer fraud that tricks people into converting cash into cryptocurrency.
Authorities in the United States have recently increased their scrutiny of tech behemoths and how they work to protect customers.
Senator Sherrod Brown, Chair of the Senate Banking Committee, sent a letter to Alphabet (parent company of Google) and Apple last week requesting information on how to prevent deceptive crypto-advertising apps.
The rapid advancement of digital technology in recent years has resulted in an explosion of cryptocurrencies and virtual currencies. Meanwhile, most countries’ regulatory authorities are befuddled and are having difficulty developing a legal framework as well as a management method.
Cryptocurrency regulations must be tightened, particularly for stablecoins and centralized crypto exchanges. Without going into specifics, the reason is obvious; consider what happened with centralized finance and the vulnerability of stablecoin’s system in recent incidents.
Most importantly, fair regulations will encourage widespread acceptance. Because eventually, mass adoption is all that matters.
So, while the goal is obvious, the approaches remain obscure. Recent regulatory moves appear to be only scratching the surface of the iceberg when the entire object necessitates prolonged observation until we extend our reach.
Cryptocurrencies, like the underlying blockchain technology, combine both opportunity and risk. Governments should indeed solidify collaboration to reduce risks and fraud in cyberspace in order to reduce the risks of this sector.