The fun might be over for cryptocurrency enthusiasts. The powers that be in the US and UK are teaming up to create regulation policies for cryptocurrency assets.
It’s no secret that cryptocurrency is rocking the financial industry. It’s the Marmite of money: some love it, some hate it. But it’s also no secret that those who hate it have a right to. Scams are abundant in this digital market where the underlying point is to be a ‘free market’, as in, free from regulation.
Regulation might sound restricting, but it’s also protective, which is why July 21st 2022 saw a gathering of US and UK government authorities gathering to put together a framework for cryptocurrency.
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Key points from the framework for cryptocurrency assets:
In a rare show of collaboration, the UK-US Financial Regulatory Working Group came together, made up of the HM Treasury, the Bank of England, the Financial Conduct Authority, the US Treasury Department, the Federal Reserve Board, the Commodity Futures Trading Commission (CFTC), the Federal Deposit Insurance Corporation (FDIC), the Office of Comptroller of the Currency (OCC), and the Securities and Exchange Commission (SEC).
In a statement posted on the US Treasury website, it was said: ‘UK and U.S. participants held the sixth meeting of the UK-U.S. Financial Regulatory Working Group (the Working Group) virtually on 21 July 2022. The Working Group was formed in 2018 to deepen bilateral regulatory cooperation with a view to the further promotion of financial stability; investor protection; fair, orderly, and efficient markets; and capital formation in both jurisdictions.’
‘On the topic of financial innovation, participants reflected on the outcomes of the U.S.-UK Financial Innovation Partnership meeting in June 2022. This included exchanging views on crypto-asset regulation and recent market developments, including those in relation to stablecoins, and the exploration of central bank digital currencies (CBDCs).’
‘All participants committed to continued cooperation to support safe financial innovation, as well as to strengthen regulatory outcomes for stablecoins across jurisdictions. Participants also considered future opportunities for further discussion on broader crypto-asset regulatory initiatives.
Participants recognized the continued importance of the ongoing partnership on global financial innovation and acknowledged the importance of both maintaining and further engaging in multilateral discussions on these topics.’
What is the FCA saying?
The UK’s Financial Conduct Authority has released updated statements on the concept of cryptocurrency, often calling for regulation, pointing out that financial firms and customers are unlikely to gain the protection of the Financial Ombudsman Service or the Financial Services Compensation Scheme if they get involved with cryptocurrency.
The official stance on the website is: ‘Before you invest in crypto assets you should be aware [that]: crypto assets are considered very high risk, speculative investments, if you buy these types of crypto assets, you are unlikely to have access to the Financial Ombudsman Service (FOS) or the Financial Services Compensation Scheme (FSCS) if something goes wrong and if you invest in crypto assets, you should be prepared to lose all your money.’
In a speech titled ‘Unstable Coins: Cryptoassets, Financial Regulation and Preventing Financial Crime in the Emerging Market for Digital Assets’, Therese Chambers, director of Retail and Regulatory Investigations, said:
‘Sometimes the relationship between promoting financial innovation and tackling financial crime is posed as a zero-sum game. However, at the FCA, we believe that the relationship between taking a tough stance on financial crime and enabling world-leading financial innovation to benefit consumers is complementary.’
What is the US Treasury saying?
Secretary of the Treasury, Janet L. Yellen said: ‘When new technologies enable new activities, products, and services, financial regulations need to adjust. But, that process should be guided by the risks associated with the services provided to households and businesses, not the underlying technology.’
‘In many cases, regulators have authorities they can use to promote these objectives and Treasury supports those efforts. If people are breaking the law and exploiting the interests of others, they should be held accountable.
To the extent there are gaps, we will make policy recommendations, including an assessment of potential regulatory actions and legislative changes. Continuing to update and improve our regulatory architecture will support US economic competitiveness and reinforce leadership in the global financial system.’
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