Creating a regulatory regime for the decentralised world of cryptoassets will take careful thought, Britain’s Financial Conduct Authority (FCA) said on Monday.
Britain’s finance ministry has already consulted publicly on whether some cryptoasset promotions need regulating.
“There are no assets or real world cashflows underpinning the price of speculative digital tokens, even the better known ones like Bitcoin, and many cannot even boast a scarcity value,” FCA Chair Charles Randell said in a speech.
“We simply don’t know when or how this story will end, but – as with any new speculation – it may not end well.”
He said there appeared to be two cases where regulators should have powers to take action: to reduce harm from cryptoasset promotions and to stop contagion at authorised firms from unregulated activities in digital tokens.
The FCA has banned global crypto exchange Binance from undertaking any regulated activity in Britain, saying it is not capable of being supervised properly and set out several requirements on the company. Binance has said it fully complies with the FCA’s requirements.
“We are not going to award FCA registration or authorisation to businesses which won’t explain basic issues, such as who is responsible for key functions or how they are organised,” he said. “That would be token regulation in the worst sense.”
The global Basel committee of banking regulators is consulting on whether holdings by banks of speculative digital tokens should be covered by mandatory full capital charges.