As we motor on into 2019, we have already seen the first piece of communication from the FCA in the form of a consultation paper from their Crypto Asset Task Force, issued last week. This document looks to set out the FCA’s proposed guidance on the existing regulatory perimeter and how crypto assets fall within that. For those who expected this communication to be ground-breaking and definitive, we are a long way from that as we await the final findings in Summer 2019 which is when we expect to see some firm guidance that we can all work to, so in the meantime we will have to make do with the snippets that they choose to publish to the market.
From a GlobalBlock standpoint it is great to see a combined and concerted effort from the government, HMRC and UK regulator to bring some clarity to the market, and we look forward not only to the protections and clear tax implications that it brings to investors, but also the overarching structure and framework presented. This should really assist in bringing the next level of investment from wider sectors to assist in the next phase of market evolution and adoption across both retail and institutions.
From a retail perspective, we cannot emphasise enough the importance of consumer protection in the guidance in line with existing financial services regulations. Despite a significant fall in crypto prices over the last 12 months, we are still experiencing solid interest from the retail part of the market, which we feel will only grow once the confidence is there that protection is available.
The institutional key to success is simple with four main drivers to future growth, the first two being education and security and the second two, and most pertinent being regulation and compliance. Essentially, the compliance environment in crypto, whilst hailed for its anonymity, makes it very difficult to verify identity and risk profiles to be compliant with KYC/AML rules, so any progression here will be welcomed. From a regulatory perspective, the current landscape is nascent and so even if other countries’ governments and financial authorities are being a little slower to react, having some insight and guidance in the UK can only be a good thing, especially given how highly regarded the FCA is.
We will continue to watch with interest how this pans out in the coming months, and of course we look forward to staying in sync with whatever is announced. The FCA’s actions certainly provide us with greater evidence that cryptocurrencies are here to stay and so need to be regulated appropriately. Our ongoing goal is to continually shadow regulatory guidance in line with our current FCA status as an Appointed Representative, to ensure our current and future clients continue to feel confident when trading with GlobalBlock.