The United Kingdoms financial ministry has begun its first march towards regulation cryptocurrencies such as bitcoin, as global begin to answer the call for the necessary oversight for the continuously growing volatile market.
As of January 23rd, the Financial Conduct Authority decide to launch a comprehensive consultation on how regulations should be conducted to everything involving crypto, from assets and exchanges investors trade on, to payment business, wallet providers and the broker trying to benefit from the market’s growth.
The idea for consultation came into existence due to following pressure from UK politicians, who’ve commented on the importance of regulating crypto assets and the technologies that develop from them. During last September, the influential Treasury Committee described the market as the “Wild West” and cried out for more protection for the consumer.
During the early quarter of 2018, the FCA was made part of the crypto asset Taskforce in order to investigate the risks and rewards for the digital currency, after the Bank of England governor Mark Carney commented on cryptocurrencies failing.
Currently, regulators want to give companies participating in the crypto markets grate clarity on applying for regulatory authorization if they need to. They also wish to assess whether or not the assets themselves are financial instruments as defined by the European’s Markets in Financial Instruments Directive II rule book.
Executive Director of Strategy and competition for the FCA, Christopher Woolard, stated:
“This is a small but growing market and we want both industry and consumers to be clear what is regulated, and what isn’t. This is vital if consumers are to know what protections they’ll benefit from and in ensuring we have a market functioning as it should.”
An increasing amount of the largest financial institutions around have only just begun to develop their own infrastructure for trading cryptocurrencies, helping the market to further mature.
Although, the United Kingdoms crypto exchange will remain accountable for only 1% of all cryptocurrencies traded worldwide each day, with a volume estimated to be at $200 million, according to the FCA.
Regulators have also planned to discuss with the industry possibly banning derivatives connected to cryptocurrencies. A percentage of the world’s leading exchange groups host the trading of bitcoin futures, which allow investors to place bets on future prices ascending or descending.
Exchanges such as Binance and Coinbase are one of the many crypto exchanges that could be affected by the local regulations the United Kingdom decides to make during the coming year. Both exchanges have flourished quite well from UK traders, to point where Binanace recently announced their expansion into Jersey with Binance Jersey in order to be much closer to their UK traders.
“Binance selected Jersey for its highly developed digital infrastructure, robust regulatory framework, and world-class financial services sector,” the exchange’s chief financial officer, Wei Zhou, during a recent interview conducted by Coindesk.
Asian exchanges have also eyeballed a possible move to the United Kingdom in recent years, which was one of the many reasons why UK regulators have questioned exchanges in the first place. During July 2018 Bithumb was hacked for an over $30 million worth in bitcoins, leading towards a lot of skepticism to erupt among UK regulators and questioning the security operating within UK borders.