The Financial Conduct Authority (FCA), the watchdog that oversees the UK’s financial sector, has issued proposals as part of its strategy to “boost the UK’s investment culture” and is calling for support from the crypto industry.
In a discussion and consultation paper released on Monday, the FCA asked crypto companies to provide feedback on proposals aimed at “widening consumer access to investing” and amending rules on “customer classification and conflicts of interest”.
sauce: FCA
The discussion paper notes that “virtually all of the performance degradation of high[digital engagement practices]apps can be attributed to crypto trading and[contracting for difference],” and the proposal highlights the potential risks for consumers using “crypto asset proxies” that lack investment limits, warnings, and “suitability tests.”
The UK watchdog suggested in a consultation document that:
“We also plan to add guidance that a personal investment history in primarily speculative high-risk or leveraged products or crypto assets is generally not indicative of professional ability unless there is strong evidence from other relevant factors, such as the customer’s ability to withstand potential losses, that the customer meets the criteria for a professional customer.”
The watchdog said the proposed changes are part of a strategy to streamline the FCA’s existing guidelines and potentially “remove some arbitrary tests and put the onus on companies to get the tests right.”
Companies that advised or sold digital assets to clients were asked to respond to the recommendations between February and March.
Related: Crypto investors donate record $12 million in election contributions to UK reform
Slow and steady progress towards pro-cryptocurrency policies
The UK has been an important hub for crypto companies operating outside the US, but many industry leaders said they were considering an uncertain regulatory environment until a shift in regulation and enforcement under US President Donald Trump.
In December, the UK government passed legislation that treats digital assets as property, providing greater clarity for cryptocurrencies such as Bitcoin (BTC) in cases such as the recovery of stolen goods or bankruptcy.
With the domestic market steadily growing, the government is reportedly considering banning crypto donations to political parties.
magazine: When privacy and AML laws conflict: Impossible choices for encryption projects
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