LONDON — The UK’s Financial Conduct Authority
(FCA) called on Monday for powers to govern the online promotion of
cryptoassets to combat a flood of "problematic content" which it said
has no value.
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With some cryptoassets using social media influencers and
other celebrities to promote so-called tokens, Britain's finance ministry has
already consulted on the need to regulate them.
The rapid growth of
cryptoassets has created a new and
complex market for regulators around the world to police, with some acting to
curb the activities of players in the sector.
The FCA in June banned Binance from undertaking any
regulated activity in Britain, saying the global crypto exchange is not capable
of being supervised properly. Binance has said it fully complies with the FCA's
requirements.
"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," FCA Chair
Charles Randell said in a speech.
He likened the internet to the Augean stables in Greek
mythology, which needed Hercules to divert two rivers to wash away decades of
manure.
"We'll need two streams to tackle the problem of online
financial scams: Appropriate regulation, including self-regulation by online
platforms and robust enforcement by the authorities; and greater consumer
awareness about online scams."
"It’s essential to find the right balance between
appropriate regulation to protect consumers and markets and encouraging useful
new ideas in this space," Randell said.
Matthew Nyman, a crypto lawyer at law firm CMS, said
Randell's speech was balanced and did not suggest regulating crypto assets any
more strictly than shares.
"We are not going to award FCA registration or
authorization to businesses which won’t explain basic issues, such as who is
responsible for key functions or how they are organized," he said.
"That would be token regulation in the worst sense."
The global Basel committee of banking regulators is
consulting on whether holdings by banks of speculative digital tokens should be
covered by mandatory full capital charges, which could affect prices of the
assets.
"Giving speculative tokens a high risk price tag is
likely to make crypto currency dealing and investment very expensive and could
limit the number of new institutional entrants," Susannah Streeter, an
analyst at Hargreaves Landsdown, said.
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