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Britain to beef up City watchdog powers over crypto-assets

Mon, 20th Jul 2020 18:37

By Huw Jones

LONDON, July 20 (Reuters) - Britain's finance ministry on
Monday proposed giving the City's watchdog new powers to
regulate crypto assets like bitcoin, and also outlined a
crackdown on misleading sales literature bombarding consumers
over the internet.

Currently any firm authorised by the Financial Conduct
Authority (FCA) can approve any financial promotion from an
unauthorised firm, but the system is not working properly, the
ministry said.

The ministry is proposing a "regulatory gateway" to pre-vet
an authorised firm that wants to give the nod to marketing
material from an unauthorised financial services firm.

"Any firm wishing to approve the financial promotions of
unauthorised firms would first need to obtain the consent of the
FCA," the ministry said in a statement.

Britain also proposes to extend the FCA's "perimeter" to
bring the promotion of some types of crypto-assets under its
wing for the first time.

"It is the government's assessment that many of these
unregulated cryptoassets expose consumers to unacceptable levels
of risk," the finance ministry's consultation paper said.

"The cryptoasset proposals are not surprising and deal
another nail in to the coffin of illegitimate ICOs (initial coin
offerings), which have lost their shine since the heydays of
2018," said Bradley Rice, senior associate at law firm Ashurst.

Huge amounts of consumer money now flow into
cryptocurrencies, often advertised on social media and almost
entirely out of the reach of the FCA, said Matt Hopkins, head of
fintech at accountants BDO.

"Regulation will make it much more difficult for crypto
businesses to access investors who may not understand the risks
they are taking," Hopkins said.

(Reporting by Huw Jones; Editing by Catherine Evans)

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