The United Kingdom’s financial regulator, the Financial Conduct Authority (FCA), has limited authority over cryptocurrencies and similar digital assets, its chair has said
FCA Chair Charles Randell spoke at the Cambridge International Symposium on Economic Crime yesterday and delivered a comprehensive presentation on regulatory measures. He suggested the regulator currently lacks sufficient powers to take necessary regulatory action against digital assets.
Randell compared the FCA’s remit with that of the US Securities and Exchange Commission (SEC). The SEC treats roughly all digital tokens as securities—except for the two largest cryptocurrencies, Bitcoin and Ether—and can act without new mandates from Congress. By contrast, the FCA is dependent on permission from the UK Parliament to expand its powers.
He observed, “The FCA currently has a limited role when it comes to registering UK crypto exchanges for anti-money laundering purposes.”
Randell also invoked the myths of Hercules and the Augean stables to describe the massive buildup of problematic material online that must be cleared away. He argued the FCA needs stronger regulatory tools and must work to raise consumer awareness to help combat the widespread financial fraud that takes place on the internet.
On the topic of crypto scams, Randell highlighted what he believes could be one of the largest finance-related advertisements by reach—Kim Kardashian’s recent Instagram post. The American celebrity was reportedly paid to promote Ethereum Max to her enormous follower base. Randell noted that the token was created just a few months earlier by unknown developers, though he stopped short of directly calling it a scam.
He warned that influencers can encourage young people to invest without any real understanding of the risks involved. He stressed that advertising and promotions should not create the impression that a cryptocurrency is regulated, and emphasised how misleading such promotions can be. He urged caution, noting that crypto scammers often use celebrities to promote tokens before executing a “pump and dump” that leaves ordinary consumers with heavy losses.
The UK Treasury is reportedly working on a proposal that would give the FCA jurisdiction to regulate the promotion of digital assets in the same way as traditional financial markets. From the FCA’s perspective, Randell said, all crypto projects should be required to meet minimum standards before being allowed to operate in the country.
His remarks follow an FCA statement that it is “not in a position” to effectively oversee Binance, despite warnings that the exchange was not meeting all required rules.
Even while acknowledging the FCA’s limited ability to authorise crypto firms to operate in the UK, Randell recognised the positive uses of cryptocurrencies. He praised the underlying technology and said it could improve the efficiency of various payment systems.