The Financial Conduct Authority (FCA), an independent financial regulatory body in the UK, has begun consulting on guidance related to cryptoassets, according to a January 23 release. The financial watchdog aims to give firms greater clarity and understanding surrounding cryptoasset activities to ensure that these entities comply with regulations and protect consumers. The consultation comes in response to requests from both the financial industry and HM Treasury's Cryptoassets Taskforce for further guidance.
Although the FCA maintains that the number of cryptoasset investors is "relatively small," it believes it needs to "address the harms from cryptoassets and encourage innovation in the interest of consumers." Christopher Woolard, the FCA's director of strategy and competition, noted:
"This is a small but growing market and we want both industry and consumers to be clear what is regulated, and what isn't. This is vital if consumers are to know what protections they'll benefit from and in ensuring we have a market functioning as it should."
The FCA has published a consultation paper and is soliciting feedback from consumers and firms alike. The consultation period will last 10 weeks, ending on Friday, April 5. A policy statement will then be made by the FCA during the summer of 2019.
Later in the year, the FCA plans to "consult on banning the sale of derivatives linked to certain types of cryptoassets to retail investors."
The financial watchdog has provided crypto-related guidance before. On June 11, 2018, the FCA published an open letter to UK bank CEOs advising them to "take reasonable and proportionate measures to lessen the risk of [their] firm[s] facilitating financial crimes which are enabled by cryptoassets."
In general, though, the FCA is wary of cryptoassets, asserting that consumers should be cautious and be prepared to lose their money.