Kim Kardashian and crypto risks – fresh warnings from the UK financial watchdog.

Event host and moderator Susannah Streeter reports on how the FCA is concerned about the level of financial promotion of cryptoassets on social media

Susannah Streeter, TV presenter, keynote speaker, event moderator, event host and MC

‘’It’s unusual to hear the chair of Britain’s financial watchdog, Charles Randell, dedicate a big chunk of his speech to superstar reality TV queen, Kim Kardashian, but it shows just how concerned the FCA is about the level of financial promotion of cryptoassets on social media. The watchdog is clearly horrified at the lack of controls implemented by major social media platforms and has urged them to crackdown on posts which aren’t clearly identified as promotions. It reckons, given the seriousness of the situation, legislation forcing them to do so should be the solution, highlighting that the current Online Harms bill just won’t go far enough.

The FCA is singing from the same songsheet as many other international regulators. It sees investing in cryptocurrencies as extremely high risk. The watchdog had already been quick to warn investors that they could risk losing all their money if they indulge in cryptocurrency trading.

It’s worried that too many financially vulnerable people are being lured into ‘get rich quick’ schemes, with 14% getting into debt to speculate in cryptoassets. The FCA has now warned that by bringing cryptocurrencies into the regulatory sphere, it risks adding more perceived legitimacy to the currencies.

Now it appears to be throwing its weight behind recommendations made by the influential Basel Committee which brings together regulators from around the world.  If banks and other regulated financial institutions dabble in crypto, the Committee is  considering making them put aside enough capital to cover 100% of potential losses. Giving speculative tokens a high risk price tag is likely to make cryptocurrency dealing and investment very expensive and could limit the number of new institutional entrants into the crypto-world.

It’s likely lower financial buffers would be needed for stable coins, which are seen as less volatile as they are pegged to currencies like the dollar. It’s clear the FCA wants to push the financial industry towards these digital assets, seeing them as a useful way to improve the payments market and move away from the crypto Wild West.