We’re used to hearing about regulation by now. But most of the news that makes the headlines comes from the United States SEC and its latest statements or subpoenas. However, it seems that the United Kingdom is following suit. The country’s financial regulator and markets watchdog, the Financial Conduct Authority (FCA), says there are now 24 pending investigations into cryptocurrencies, according to Citywire.
Regulatory Action Could be Taken
The FCA confirmed that it has looked into at least seven whistle-blower reports regarding cryptocurrency operations so far this year. The aim is to assess whether or not these companies are engaged in regulated activities without the necessary authorization to do so.
If its findings prove affirmative, action will likely be taken and will depend on the severity of each case. Just like the SEC, the FCA is designed to protect consumer interests. As such, the probe will begin by determining which activities constitute the greatest risk to consumers.
In a statement released in April, the FCA said that any company conducting “regulated activities in cryptocurrency derivatives” must comply with its rules.
“It is likely that dealing in, arranging transactions in, advising on or providing other services that amount to regulated activities in relation to derivatives that reference either cryptocurrencies or tokens issued through an initial coin offering (ICO) will require authorization by the FCA,” the statement concludes.
What Does This Mean For Non-Compliant Companies?
Depending on the level of risk determined by the FCA, punishments could range from an advisory statement on its website about certain firms or individuals, to civil action, halting operations, freezing assets, and even criminal prosecutions.
The operations of cryptocurrency companies have become a topic of increased interest for regulatory bodies around the world. So far, the UK has been fairly lenient in its approach to regulation; however, certain vehicles associated with cryptocurrency are within the purview of the FCA, including cryptocurrency futures, cryptocurrency options, and cryptocurrency contracts for differences (CFDs). However, the FCA notes that cryptocurrencies in general do not fall directly under its authority.
This is the first of what could be many clampdowns on crypto firms in the UK. However, the Bank of England’s official review of cryptocurrencies and the FCA’s approach moving forward will be announced later this year.