Several Cryptocurrency Firms Under Investigation In The UK Over Sale Of The Digital Tokens
Even as the cryptocurrency market wallows in the bearish trend, UK regulators are not letting their guard down. As the Financial Times reports, the UK Financial Conduct Authority (FCA) is probing 18 crypto-related firms. In particular, the firms are reportedly selling cryptocurrencies, to which the UK does not have a regulatory framework.
Further, the publication revealed that a few other companies received consumer warning alerts from the FCA. Particularly, the FCA accuses the firms of selling cryptocurrency investment products that are predatory in nature.
Interestingly, the reports come just a month after the FCA said it would consider actions against crypto-related entities. In November, FCA's executive director of strategy and competition said the institution would "undertake one of the most comprehensive responses globally to the use of cryptoassets for illicit activities."
Lack of regulatory clarity
Christopher Woolard expressed his concern that some entities were taking advantage of retail customers by offering complex crypto-focused products. As per Woolard, such products are too volatile and too leveraged to pass for retail offerings. Further, he noted that the crypto market consists of many integrity issues.
According to the FCA, there are no clear distinctions yet in the cryptocurrency market among products offered. While some products appear simply as security tokens, the FCA thinks they are "securities in their own right under the Markets in Financial Instruments Directive II."
The FCA said in a request underlined by the Freedom of Information Act that it opened investigations on various entities. In an official statement, the authority revealed that it opened investigations against 67 crypto-related entities in mid-November. By the time of releasing the statement, 49 investigations had been closed. As such, the authority remains with 18 active probes.
Proportionate regulations
Interestingly, the crackdown comes at a period when UK lawmakers are calling for tighter regulations of cryptoverse. To demonstrate their resolve, the government expressed its willingness to "give the FCA power to oversee the cryptocurrency industry."
In this light, the regulator revealed that it will promulgate a consultation in the early weeks of 2019. Particularly, the main theme of the exercise will be to find a consensus regarding the regulation of cryptoverse. Interestingly, the government hopes that the consultation will help to determine if the FCA's mandate should extend to cryptoassets.
On their part, members of the cryptocurrency community are encouraging measured regulations in the sector. CryptoUK, an umbrella organisation in cryptosphere, is urging the government to introduce "proportionate regulations."