On the one hand, we have some pretty strong evidence of global regulators beginning to rein in the hitherto unfettered cryptocurrency industry.
In the last 12 months, billions of dollars have been raised through ICOs that have offered nothing in the way of protection for investors. Government departments are now more than just voicing their concerns over what some see as no more than crowdfunding for gamblers the obvious concern being that such unregulated markets are vulnerable to manipulation by traders.
The US Department of Justice launched their own criminal investigations a while back into the potential price manipulation of several cryptocurrencies – thus far they have brought fraud charges against a number of ICOs.
By contrast, in November last year, there were clear rumblings of concern from the UK FCA on the matter of CFDs, indicating the possibility of eruptions to come. However, the FCA volcano calmed as in late December they seemed to take a step back in deciding not to regulate whilst simultaneously stating this inaction should not be interpreted as an approval of cryptocurrency investments.
So the FCA may not (yet) regulate digital currencies but it does closely scrutinise cryptocurrency derivatives because they are classified as financial instruments and depending their structure will regulate them on a case-by-case basis.
The rumblings continue in the background as the combined weight of the Mark Carney and a UK parliamentary Treasury Committee are looking for increased oversight of cryptocurrencies.
Possibly as an indicator of the UK authorities future intent we can see how they are dealing with illegal cryptocurrency brokers who might have previously continued to work under the radar.
As an example of this Get Financial, a cryptocurrency and FX broker, has just been blacklisted by the FCA as they are alleged to have claimed to be operating with an FCA license but in fact, are not authorized to provide investment services or activities in the UK. In a statement, the FCA recommends traders ”avoid Get Financial and all other shady brokers at all costs”.
Additionally, from a recent FOI request, we now know that the FCA is “making enquiries” into the activities of 24 unauthorised cryptocurrency related firms.
Without a doubt there is more to come as cryptocurrencies are definitely on the FCA’s agenda for this year, as the saying goes, mighty oaks from little acorns grow!
Meanwhile on the other hand, we read that innovative thinking has led UNICEF to ask ‘donators’ to fundraise without cash instead to use their computer’s power to assist data-mining just by browsing.