Home Technology Major regulators like the FCA seek to legislate on cryptocurrency

Major regulators like the FCA seek to legislate on cryptocurrency

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The crypto market remains in limbo as we move forward into the final four months of the year. Now FCA is looking for new ways to regulate cryptos.

The presence of the crypto industry is undeniably more widespread than in its early days. While the revolutionary potential has shaped more ideas and approaches, it has also increased the space for frauds and scams, leading to major losses.

The strengthening of law enforcement is the inevitable result of a series of scandalous events. Cryptocurrency and high-risk investments are slightly different.

In a press release on Monday, the UK’s Financial Conduct Authority (FCA) stepped in to tighten high-risk investments‘ regulations with a set of new rules.

The regulatory agency said strict rules for cryptocurrency will soon be introduced.

FCA seeks broader reach

The FCA primarily targets marketing activities, aimed at enhancing client protection against illegal acts related to high-risk investments.

The rules require sufficient clarity on the risks associated with investing in an instrument. Additionally, investment incentives such as referral bonuses are illegal under the new FCA regulations.

“We want people to be able to invest with confidence, understand the risks involved, and get investments that are right for them and that reflect their risk appetite,” said Sarah Pritchard, FCA’s executive director of markets.

The rules do not directly impact crypto promotions, but the agency warned against tightening cryptocurrency regulations sooner or later.

For UK regulators, crypto printing is unlikely and digital assets still carry relatively high risks. According to their statement, investors should recognize the high-risk factors associated with crypto assets before jumping in.

A long time to come

The UK government had previously handed oversight power to the FCA and the agency was quick 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 execution notice was issued, requiring crypto firms to clarify market volatility to clients and stop appealing to novice investors.

Too many warnings will soon turn into actual implementation and crypto promotion services as noted by the FCA will soon be tightly regulated.

Crypto scams and other criminal activities have always been the top concerns of world governments.

US authorities have long called for stricter control on cryptocurrencies. The Federal Bureau of Investigation (FBI) has warned people about scammers using ATMs to perform high-tech wire transfer fraud that tricks people into converting money into cryptocurrency.

US authorities have recently stepped up their oversight of tech giants and how they work to protect customers.

Senator Sherrod Brown, Chairman of the Senate Banking Committee, sent a letter to Alphabet (Google’s parent company) and Apple last week requesting information on how to prevent misleading crypto-advertising apps.

Multiple layers

Rapid advances in digital technology in recent years have led to an explosion of cryptocurrencies and virtual currencies. Meanwhile, regulatory authorities in most countries are confused and struggling to develop a legal framework and a mode of management.

Cryptocurrency regulations need to be strengthened, especially for stablecoins and centralized crypto exchanges. Without going into details, the reason is obvious; consider what happened with centralized finance and the vulnerability of the stablecoin system in recent incidents.

More importantly, fair regulation will encourage broad acceptance. Because ultimately, mass adoption is all that matters.

Thus, if the objective is obvious, the approaches remain obscure. Recent regulatory moves seem to be just scratching the surface of the iceberg when the entire object requires 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 risk and fraud in cyberspace in order to reduce the risks of this sector.

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