UK Financial Authority Wants To Have The Power To Regulate Online Promotion Of Crypto Assets, Here's The Reason

The online over-promotion of cryptocurrencies, makes them unreasonable in value. (photo: doc. unsplash)

JAKARTA – The UK's Financial Conduct Authority (FCA) on Monday 6 September asked for powers to regulate the online promotion of crypto assets to combat the flood of "problematic content" that it says has no value.

With some crypto assets using social media influencers and other celebrities to promote so-called tokens, the UK Ministry of Finance has been consulted on the need to regulate it.

The rapid growth of crypto assets has created a new and complex market for regulators around the world to the police, with some even acting to curb player activity in the sector.

The FCA in June banned Binance from conducting regulated activities in the UK, saying the global crypto exchange was not able to be properly monitored. Binance has said it is fully compliant with FCA requirements.

“No real-world asset or cash flow underpins speculative digital token prices, even better-known ones like Bitcoin, and many cannot even boast of their rarity”, FCA Chairman Charles Randell said in a speech.

He likened the Internet to the Augean stables in Greek mythology, which required Hercules to divert two rivers to clean up decades of dirt.

"We need two streams to tackle the problem of online financial fraud: proper regulation, including self-regulation by online platforms and strong enforcement by authorities; and greater consumer awareness of online fraud", Randell said.

"It's important to find the right balance between proper regulation to protect consumers and markets and encourage new ideas that are useful in this area", Randell said.

Matthew Nyman, a crypto attorney at law firm CMS, said Randell's speech was balanced and did not suggest regulating crypto assets more strictly than stocks.

"We will not provide an FCA registration or authorization to a business that will not explain basic issues, such as who is responsible for key functions or how they are regulated", Nyman said. "That would be token regulation in the worst sense".

The banking regulator's global Basel committee is consulting on whether holdings by speculative digital token banks should be covered by the mandatory full cost of capital, which could affect asset prices.

“Giving speculative tokens a high-risk price tag is likely to make cryptocurrency transactions and investments very expensive and could limit the number of new institutional entrants”, said Susannah Streeter, an analyst at Hargreaves Landsdown.