The FCA is expected to publish a review of cryptocurrencies later this year that could go a long way toward deciding what regulations will be imposed on the technology and in deciding Britain’s place in the crypto-sphere post-Brexit.
In its 2018/19 business plan, Britain’s financial watchdog, the Financial Conduct Agency, has confirmed that they intend to respond to the UK Treasury’s inquiry into cryptocurrencies. The section of the document dealing with crypto acknowledges the fact that most cryptocurrencies (those designed as a means of payment and exchange) do not presently fall under their perimeter, however, it is believed that the FCA’s review could still go a long way in deciding how they are regulated in the UK.
The FCA is part of the UK’s crypto task force (alongside the Treasury and the Bank of England) that was established to assess the risks and potential of the technology. The BoE’s chairman Mark Carney has been critical of the risks of cryptocurrencies in the past, and his words have been echoed somewhat by FCA Chief Executive Andrew Bailey who has said that tackling risks on the cyber-front is important as it is a risk that “never stands still.” This is a fair comment, and the increased discussion of crypto by the authorities suggest that the UK is getting ready to establish coherent regulations on new technologies.
This year the FCA’s business plan will have to contend with the consequences of Brexit, and this will undoubtedly be their focus. Bailey has also admitted that due to a lack of certainty and substance surrounding Brexit, the FCA will need to be “flexible” so they can deal with the challenges posed by Britain’s departure from the EU and the lack of a clear time frame is a huge part of this. As the FCA has admitted that most altcoins do not come under their regulatory umbrella, it is unlikely that they will lead the charge, but their presence on the crypto task-force still makes them an important player, and their verdict will surely influence the Government’s stance on cryptocurrencies.
What does this mean for crypto?
If Britain leaves the single market, we will likely see measures taken by the UK to encourage investment post-Brexit and given continuous growth of the crypto sphere, distributed ledger technology and altcoins cannot be ignored. Many European countries are investigating blockchain technology at the government level, and Britain will want to get ahead of the pack by encouraging FinTech developers to come to the UK.
The BoE manager seemed to soften his critique of crypto shortly before the G20 meeting, and Britain has signed an agreement with Australia, dubbed a “FinTech bridge.” These appear to be early signs that the UK will be looking to make itself more appealing to developers, which likely includes those working on emerging technologies.
Europe is already making massive strides to rein technology in with its GDPR regulations, which come into play next month, and their increasing interest in blockchain technology is likely to attract innovators. The recent focus on the crypto sphere may be in some part fuelled by Britain’s imminent departure from the single market, but we will have to wait for the authorities’ findings to know what approach the UK will take, but if regulations favor innovation, it could have a positive impact.
Michael is an English and Creative writing graduate of Liverpool John Moore’s University, a former editor of several magazines, and a crypto-currency enthusiast. He is mostly interested in crypto-legislation and the potential of decentralized technology to change the world.