The UK’s Financial Conduct Authority (FCA) chair has questioned the legitimacy of speculative crypto tokens and highlighted the challenges facing the watchdog in regulating the cryptocurrency sector.
In a speech given on Friday, FCA chair Charles Randell expressed scepticism about “speculative crypto tokens”.
Cryptoassets have been a hot topic for the financial watchdog, particularly as the government has announced its desire to make the UK become a world leader in cryptoassets.
Randell took particular issue with speculative crypto tokens – cryptoassets that have a hypothetical value that isn’t based on anything of inherent value, as opposed to stablecoins which have a value tied to something else.
“Should people be encouraged to believe that these are investments when they have no underlying value?” Randell said.
Randell added: “When the price of Bitcoin can readily halve within six months, as it has done recently, and some other speculative crypto tokens have gone to zero… should people without any significant savings or financial experience be encouraged or permitted to buy speculative crypto at all?”
Randell also flagged the concern over the funding required if the watchdog is to increase its regulation of the cryptocurrency sector, asking “how the FCA will raise the money to pay for the very significant costs of this additional regulation?”
The regulator chair argued that the financial services industry should not be “exposed to the costs of failing crypto firms through the Financial Services Compensation Scheme”, instead suggesting that consumers should be more aware of the risks.
Randell criticised the numerous celebrity endorsements of cryptocurrency investments, saying consumers are becoming too eager to “do something that may seriously harm their financial lives”.
Randell’s speech comes as the cryptocurrency world faces a significant market downturn with falls across, with speculative digital currencies and stablecoins both dropping in value.
Despite this, the Treasury has maintained that it plans to incorporate cryptocurrency into the UK economy, although it acknowledged it would have to be careful in how it went about the task.
The post FCA chair warns against ‘speculative crypto tokens’ with ‘no underlying value’ appeared first on UKTN | UK Tech News.
