UK’s Financial Conduct Authority (FCA) Gets More Time to Introduce New Rules, Courtesy; Crypto Market Crash

According to reports, since the cryptocurrency industry has taken a blow recently, the Financial Conduct Authority (FCA) of the UK has gotten more time to revise the financial regulations of the crypto industry.

The crypto industry has rapidly grown since it was first introduced and its fast paced establishment has given rise to various risks such as investment issues and problems surrounding the development of the industry. The growth of the industry and the issues that were following the growth piled up pressure on the government and the financial regulators to revise the regulations of the crypto industry.

As the market has collapsed lately, the pressure has been put off from the government and the Financial Conduct Authority (FCA) giving them more time to analyze the market and introduce new rules for the industry. The government and financial regulators have also stipulated that they will need more time to examine the crypto market in order to maintain balance between the security of investors and further innovations and thus, launch new regulations accordingly.

Gillian Dorner, deputy director for financial services at Britain’s finance ministry, spoke to the City & Financial Global conference to explain the intentions of the financial regulators:

We want to take the time to look at that in a bit more depth and make sure we take a proportionate approach.

Ms. Dorner clearly stated that the regulators do not wish to take steps in hurry and before coming to any solid conclusion, they need to thoroughly examine the current surroundings and processes of the crypto industry and then implement new reforms accordingly.

It is known that the current regulations in the financial industry have certain loopholes which need betterment so in order to look into the market in more depth, the British regulators have taken 2,000 crypto assets into examination and to determine the issues in the existing regulations so that new rules can be introduced as per the need.

FCA’s executive director for strategy and competition, Christopher Woolard has also backed the claim that there are a few grey areas in the current financial regulations of the crypto industry which need to be analyzed to help present new and better implementations. He further went on to say that the FCA needs to “clarify which crypto assets fall within [its] existing regulatory perimeter, and those crypto assets that fall outside” to conclude which assets currently follow the existing regulations and what are the problems they are facing in the market and which assets do not follow these regulations at all and how are they processing.

Mr. Woolard also said in a speech:

To help firms better understand the boundaries of current regulation in relation to crypto assets, the FCA will consult on perimeter guidance by the end of 2018.

He states that the organizations involved in the crypto industry also need to realize the need to implement change as the existing regulations have their own limitations for which a detailed evaluation is in process.

After examination of the 2,000 crypto assets, the government and financial regulators will come to a combined final verdict on whether the crypto market needs change or not, Mr. Woolard believes. Furthermore, he says that in case new reforms are introduced, the UK government and regulators will need support from international markets so that the change can be executed on a global level.

Christopher Woolard emphasizes on the issue that other countries functioning in cryptocurrency must also realize the need for change in the regulations of the industry to protect investors and to help new inventions make impact in the market. As other countries would encourage the need for change, it would be easier to execute new reforms internationally.

Moreover, he says that the FCA is also looking to put a full stop to the crypto contracts-for-difference (CFDs) as the sale of these products might result in damaging the market, claiming that these are “complex, volatile and often leveraged derivatives products based on exchange tokens with underlying market integrity issues”. A decision is said to be taken on the matter within the first quarter of the year 2019.

The CFDs however follow the existing trends and financial regulations of the crypto industry and only require the official authorization of the regulators to continue their processes. Now does the issue lie within the sale of these products or the existing regulations or maybe even both?

Therefore, despite the recent crash in the market, the British government and regulatory bodies need to make a decision based on their conclusion to implement new reforms to enhance investors’ protection and foster new developments in the industry as now they have also gotten the extra time they were rooting for.