The FCA is Preparing For Cryptocurrencies Adoption

Traditional financial institutions in the UK and most countries in the world haven’t been very supportive of cryptocurrencies in the past several years. However, 2018 has seen a widespread “change of heart”. Institutions that were thought to be against cryptocurrency adoption and integration are now softening their stand.

The FCA is one of those institutions that have begun making significant steps towards positive cryptocurrency regulation. In March 2018, The FCA, in conjunction with the Bank of England launched a cryptocurrency taskforce aimed at regulating and fostering the rapidly expanding sector. The regulator also launched a fintech sandbox meant to boost fintech development by attracting tech companies from all over the world.

According to the FCA’s 2018/2019 business plan, [1] the regulator will give a detailed report on cryptocurrencies late 2018. However, the FCA has already released a guideline for financial institutions interested in launching cryptocurrency derivative offerings.

There has been a longstanding apathetic attitude about Bitcoin among other Cryptocurrencies from traditional financial institutions like the BOE (Bank of England).

BOE governor, Mark Carney has been on record condemning Bitcoin in an address he made in February 2018 at Regent University. [2] In his remarks, Carney stated that Bitcoin had failed miserably as a store of value and medium of exchange.

Some renowned economists have also been on record saying it was unlikely that traditional financial institutions would “warm up” to Cryptocurrencies. One such economist is John Van Reenen, Professor of Economics at MIT.

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However, the latest move by the FCA suggests otherwise. There is a strong indication that the regulator is taking steps that will see England become the most attractive destination for Blockchain start-ups and tech companies. [3]

Volatility has been the primary concern about Cryptocurrencies globally. However, these concerns seem to be reduced currently given the interest generated by the sector in the past year. The FCA seems to be following in the footsteps of American exchange operators. The CBOE (Chicago Board Options Exchange) and the CME (Chicago Mercantile Exchange) were the 1st to float Bitcoin Future contracts. The move boosted Bitcoin’s price to peak at $20,000 a week later before a price correction.

This wouldn’t have been possible if the CFTC hadn’t authorised the move to launch cryptocurrency futures options. The CFTC has gone further and promised regulatory guidelines which are expected to boost cryptocurrency ICOs and Blockchain technology.

Cryptocurrency trading options

Similarly, the FCA has acknowledged demand for cryptocurrency derivatives in the UK. [4] The regulator has issued a statement to companies launching cryptocurrency derivatives. Although there is no cryptocurrency regulation in the UK currency, the FCA requires firms interested in offering contracts for differences, future and crypto options to follow the existing FCA regulations.

Blockchain

Since cryptocurrencies appear to be an unstoppable force that still raises suspicion among traditional financial players, it is difficult to predict how the pending cryptocurrency review will unfold. However, the FCA is likely to focus on lucrative Blockchain technology applications.

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Legislators such as Matt Hancock have already been on record predicting an unmatched impact of the technology in the future. In recent remarks, Hancock highlighted how the British government has already set aside 10 million pounds to fund different Blockchain projects on energy and voting systems among other projects.

In his remarks, Hancock stated that the cryptocurrency task force will create an approach that matches the need for growth and innovation while managing the risks presented by the sector.

According to Nigel Green, Founder and C.E.O. of Financial consultancy firm deVere Group, the growth of cryptocurrencies in the recent past can only be expected to soar over the next 10 years as more businesses adopt the main cryptocurrencies into their activities to meet growing customer demands.

Green expects the FCA, being one of the most respected and influential financial regulators globally to be at the forefront of shaping as well as defining cryptocurrency policies for regulators globally. He also expects the FCA to define the thinking behind cryptocurrencies since most leading economies in the world are already paying close attention to the cryptocurrency market.

If the FCA follows the CFTC and SEC move, support for cryptocurrencies in the UK and Europe at large would surge. Positive news from the FCA would give the cryptocurrency market a much-needed boost. The regulator has come a long way from issuing cryptocurrency related warnings to investors to showing signs of adoption.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.

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