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.