The Financial Conduct Authority, the UK’s financial watchdog, is currently conducting investigations into 24 different cryptocurrency businesses, according to the Financial Times.
In addition to this, seven whistleblower reports have been opened against cryptocurrency businesses so far in 2018.
The information was shared as a result of a Freedom of Information request by an accountancy and consulting firm.
The firms under investigation are unregulated. The investigations are to ascertain if they are conducting activities that require regulation. “If we conclude that they are, then we may investigate and take action, identifying and determining the most serious matters which pose the greatest risk to consumers,” said the FCA in a statement.
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The FCA said that it would “continue to monitor the appropriateness of the existing regulatory framework”.
That regulatory framework is still being worked out. The FCA considers cryptocurrency to be a commodity, not a currency, so technically it falls outside of the authority’s remit. In April it issued a statement clarifying that while cryptocurrencies themselves are not regulated, companies that offer cryptocurrency derivatives do need a licence. However, companies whose sole purpose is to provide ownership of cryptocurrency to end clients remain completely unregulated.
In February of this year, a number of cryptocurrency companies joined forces to form CryptoUK, a self-regulatory industry body. All members must sign a code of conduct. In April, the organisation offered a written proposal for regulations to the government, suggesting that licences be issued to companies that meet certain standards. The group wants regulation because this lends legitimacy to the industry which is good for business, and also means that companies receive protection under the law.
CryptoUK suggested that instead of regulating individual cryptocurrencies, the FCA should focus on the companies that process them – exchanges, wallet providers, trading platforms, etc.
Two days ago, the FCA issued a warning against a cryptocurrency broker called Get Financial. The company’s crime was that it falsely claimed to be licensed – the FCA advises against giving this firm any money.