FCA chief Andrew Bailey acknowledges the roles of cryptocurrencies, but states “risks are evident”.
The roles of cryptoassets should not be ruled out, according to the UK’s Financial Conduct Authority (FCA) chief executive Andrew Bailey.
During a speech at the FCA Annual Public Meeting, the FCA chief outlined four operational risks that have been noted by the regulator, such as the impact of ‘technological change and innovation’, and referenced cryptocurrencies as an example of such innovation. However, Bailey defended the role of new technologies in financial services and advocated for a balanced approach to innovation.
“The second area is the impact of technological change and innovation,” said Bailey in his speech. “As I said earlier, the FCA is firmly a supporter of innovation, but we must balance this against the threats that come from some forms of innovation and the new issues they can pose. A good example of this is cryptoassets. We are keen to see the potential of their underlying technology, and do not rule out roles for cryptoassets themselves. But the risks are evident too: not least in the question of whether the consumers who use them understand the asset and price volatility they involve.”
Bailey stated the FCA is working closely with the Treasury and Bank of England, referencing the Cryptoassets Task Force (CTF), to come up with appropriate responses to those issues. The task force was announced at the International Fintech Conference in March of this year to examine the benefits and risks of cryptocoins and digital assets.
“Be Prepared to Lose All Your Money”
Bailey’s comments on cryptocurrencies come almost a year after he warned Bitcoin investors they could lose all their money. In an interview for the BBC in December 2017, Bailey said ‘relatively little’ was known about ‘what informs the price of Bitcoin’.
The FCA has also been vocal about cryptocurrency volatility and risks in the past. In August, the regulator issued a number of warnings against cryptocurrency scams that impersonated FCA-regulated companies in an attempt to lure investors.