Latest Crypto Market Slump Eased Off Pressure From UK Regulators

This week’s cryptocurrency market crash has helped UK regulatory to ease off the pressure of introducing new regulatory measures for the cryptocurrency market. According to the Reuters, UK’s Financial Conduct Authority (FCA) was under severe pressure of introducing regulation that could have possible led to a hard-hitting approach jeopardizing the development of the FinTech sector.

The recent market crash has also affected the trading activity in the crypto market causing volumes to dry up. This has ultimately played in favor of the British regulatory reducing the burden from its shoulders. Now the FCA representatives and government authorities will take some more time towards fine-tuning regulations which maintain a balance between innovation and investor protection.

“We want to take the time to look at that in a bit more depth and make sure we take a proportionate approach,” said Gillian Dorner, Deputy Director for Financial Services at the British Ministry of Finance, while speaking at the City & Financial conference.

This looks to be a more concise approach from the British regulators from their previous stand. Earlier this year in May, the Bank of England had issued a warning on introducing outright ban on cryptocurrencies citing them as “inherently risky”. The British central bank then said that cryptocurrencies have failed to fulfil their basic obligations of money or other alternate form of ledger.

Last month, a joint task force formed by BoE, Britain’s Ministry of Finance, and FCA had recommended a ban on retail sale of derivative products that are linked to cryptocurrencies.

However, the FCA’s executive director for strategy and competition - Christopher Woorlard said that the agency is working on developing a framework while considering the country’s existing financial regulations.

Woorlard says that by the end of 2018, FCA will “clarify which cryptoassets fall within [its] existing regulatory perimeter, and those cryptoassets that fall outside.” Moreover, he also said that FCA will work in coordination with the Ministry of Finance to decide if the existing regulatory perimeter would need any “sifting” or expansion. Moreover, FCA will regularly observe the changing environment around the global crypto market. Woorlard stressed that FCA will require international cooperation for better regulation of the crypto space.

However, Woorlard in his speech made it clear that FCA will consider a ban on crypto contracts-for-difference (CFDs). He noted the concerns over retail customers being sold “complex, volatile and often leveraged derivatives products based on exchange tokens with underlying market integrity issues.”