Charles Randell, Chief of the Financial Conduct Authority (FCA), the top financial watchdog in the UK today in his address at Cambridge International Symposium laid out risks associated with crypto regulations. During his address, he talked about the speculative nature of crypto assets and how it is not easy to regulate something which hasn't been around for so long. He said,
“There are no assets or real-world cashflows underpinning the price of speculative digital tokens, even the better-known ones like Bitcoin, and many cannot even boast a scarcity value,” said Randall. “These tokens have only been around for a few years, so we haven‘t seen what will happen over a full financial cycle. We simply don’t know when or how this story will end, but – as with any new speculation – it may not end well.”
During his address, Randell also talked about the rising number of social media scams promoted by some of the top celebrities. He cited the recent example of Kim Kardashian who was seen promoting an unknown project called ‘Ethereum Max Community.’
“Of course, I can't say whether this particular token is a scam,” he explained. “But social media influencers are routinely paid by scammers to help them pump and dump new tokens on the back of pure speculation.”
FCA Cites Difficutlites in Regulating Crypto Market
The FCA chief reinstated the risks associated with the crypto market and explained that the main reason not to regulate the crypto market is that several other similar speculative markets such as buying gold and real estate are not regulated either. Randell explained,
“There is no shortage of consumer harm in many of those markets,” said Randell. “So why should we regulate purely speculative digital tokens？ And if we do regulate these tokens, will this lead people to think that they are bona fide investments？ That is, will the involvement of the FCA give them a ‘halo effect’ that raises unrealistic expectations of consumer protection？”
The FCA chief's scrutiny about crypto assets comes on the heels of its Binance saga where the regulatory watchdog first issued a warning against the crypto exchange but later claimed it has met all the requirements put forward by the FCA but still cannot be regulated effectively.
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