A senior official at the UK’s primary financial watchdog has called for caution among the public when it comes to trading or investing in digital currencies like bitcoin.
Chris Woolard, executive director of strategy and competition at the UK’s Financial Conduct Authority (FCA) was speaking at a blockchain event last week when he spoke about digital currencies. As reported by Financial News London, Woolard specifically underlined the significant gains made by the likes of bitcoin in recent times. Bitcoin hit an all-time high of $3,000 last week. The regulator underlined digital currencies’ volatility, referring to bitcoin’s value being less than a third of the all-time high in June last year.
Such gains have seen digital currencies, particularly Bitcoin and Ethereum, take the mainstream spotlight. Woolard acknowledged the soaring increase in trading due to investors’ interest, while adding “that’s not to say that we don’t see risks.” Specifically, the regulator pointed to their lack of consumer protection due to an absence of regulation, claiming that consumers and novice investors could be mistaken into thinking they are safeguarded akin to investments in traditional financial instruments.
According to the publication, he stated:
We don’t prohibit regulated firms from engaging in digital currency trading, nor do we prohibit banks from offering banking services to deal with currency firms that use [blockchain technology]. I am not saying that we view digital currencies as an inherently bad thing…but we do have to exercise a degree of caution.
The FCA is notably among the more FinTech-forward regulators in the world, often seen as setting the precedent by its counterparts. London is frequently chalked to be among the world’s leading FinTech hubs. In April 2016, the FCA granted an electronic money license to US-based Circle, a bitcoin exchange at the time. Earlier this year, the regulator gave its approval to London-based Yielders, which became the first Sharia-compliant Islamic finance firm to receive the regulatory stamp. Woolard himself has been previously quoted to be encouraging firms and startups innovating with blockchain technology.
In its role as a watchdog, the FCA has also warned against digital currency schemes like OneCoin in the past.
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Last modified: May 21, 2020 9:45 AM UTC