LONDON, Sept 6, The Financial Conduct Authority (FCA) of the United Kingdom appealed on Monday for powers to oversee the online promotion of crypto assets to combat a flood of “problematic content” which it said has no value.
Because certain crypto assets use social media influencers and other celebrities to promote so-called tokens, the United Kingdom’s finance ministry has already held consultations on the need to regulate them.
The rapid expansion of crypto assets has created a new and complex market for regulators around the world to oversee, with some taking steps to limit the sector’s operations.
The FCA barred Binance from engaging in any regulated activity in the UK in June, claiming that the global crypto exchange is incapable of being properly monitored. Binance has stated that it conforms fully with the FCA’s regulations.
“There are no assets or real world cash flows underpinning the price of speculative digital tokens, even the better known ones like Bitcoin, and many cannot even boast a scarcity value,” FCA Chair Charles Randell said in a speech.
He compared the Internet to the Greek mythological Augean stables, which required Hercules to reroute two rivers in order to wash away decades of manure.
“We’ll need two streams to tackle the problem of online financial scams: appropriate regulation, including self-regulation by online platforms and robust enforcement by the authorities; and greater consumer awareness about online scams.”
“It’s essential to find the right balance between appropriate regulation to protect consumers and markets and encouraging useful new ideas in this space,” Randell said.
Randell’s speech, according to Matthew Nyman, a crypto lawyer at law firm CMS, was balanced and did not advocate for crypto assets to be regulated more severely than stocks.
“We will not grant FCA registration or authorization to businesses who refuse to clarify basic concerns, such as who is responsible for important functions or how they are organised,” he stated. “In the worst sense, that would be token regulation.”
The worldwide Basel committee of banking regulators is considering whether banks’ holdings of speculative digital tokens should be subject to required full capital charges, which could alter asset prices.
“Giving speculative tokens a high risk price tag is likely to make crypto currency dealing and investing highly expensive and could limit the number of new institutional entrants,” Hargreaves Lansdown analyst Susannah Streeter said.