FCA looking for more powers to regulate crypto ads
The FCA Chairperson, Charles Randell, has called for more powers to be given to the regulatory body so that it would be able to control and regulate the ads that are related to crypto to ensure that investors and users are not misled by these ads.
The main 2 issues with these crypto ads, as indicated by the Chair was that they could be misleading investors into believing that these crypto tokens were regulated products, and secondly, was the risk of contagion as the cryptos and related services began to spread across multiple financial firms. The Chairperson said that many of these ads are highly misleading to attract investors and traders into investing in them without understanding the fundamentals and the risks associated with such products. These ads also do not specify that most of these crypto tokens are not regulated products and this could lead the investors into trusting such misleading ads and investing in the associated crypto tokens and companies.
He also highlighted that most of these ads are online and hence it is very difficult to trace the origin of such ads as many of them are given by companies and individuals outside the country and so there was a need for the regulator to have powers to regulate such ads. He also said bringing in comprehensive laws is likely to take a lot of time and thought and so for now, the immediate approach would be to give more powers to the regulators to stop such ads and campaigns by social media influencers to promote specific crypto products and tokens.
Another worrisome development that the Chair pointed out was the introduction of crypto tokens by various financial firms that are approved by the FCA. Many financial firms including Revolut, Plum, and others either build tools for crypto trading or provide crypto trading services for their clients.
“It’s essential that the boards of FCA authorized firms can show how they have addressed the risks that unregulated activities about digital tokens can pose to those firms: to both their conduct and their prudential soundness,” said Randell.
The FCA is looking to ensure that the spread of crypto trading and investment does not happen in an uncontrolled manner as it could lead to undesirable consequences for the users, the firms as well as the regulatory body, as seen in the case of Binance.