REGULATION

The UK Financial Conduct Authority claims that crypto assets have no intrinsic value.

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The UK Financial Conduct Authority claims that crypto assets have no intrinsic value.

The UK financial regulatory authority recently released its final guidance on crypto assets, warning investors that they will not be protected by regulatory safeguards when buying or selling cryptocurrencies. Therefore, crypto investors will not be able to seek recourse from the UK Financial Ombudsman Service in the future.

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According to the regulatory guidelines released by the Financial Conduct Authority (FCA) in the UK, the Financial Services Compensation Scheme does not cover unregulated crypto assets, such as etc, and investors will also not be able to use the services of the Financial Ombudsman Service.

FCA Executive Director Christopher Woolard commented on the crypto market:

This is a small, complex and evolving market covering a broad range of activities. Today's guidance will help clarify which crypto activities fall under our regulatory scope.

Crypto Enthusiasts Push Back Against "No Intrinsic Value" Argument
The FCA continues to caution investors about crypto assets, emphasizing that cryptocurrencies have no "intrinsic value." The institution states that investors should be aware of market risks, and assets being unregulated mean that the Financial Services Compensation Scheme does not cover these compensation funds.

This argument has sparked discontent among many crypto enthusiasts. Market analyst at eToro, Mati Greenspan, believes this viewpoint is flawed as government-backed fiat currencies are also prone to significant devaluation and retorted on Twitter:

Who is protecting the British public from the massive devaluation of the Pound? The Pound has dropped 30% against the Dollar in the past five years. Do you have any consumer protection measures for that?

In fact, as reported by ABM earlier, since the 2016 Brexit referendum, the Pound has significantly dropped, nearing historic lows.

Source : tradingview

When Binance Jersey, the Pound trading platform of Binance, landed in January this year, Binance CFO Zhou Wei also pointed out:

Cryptocurrencies can hedge against the uncertainty of Brexit, and the turmoil caused by Brexit could ultimately affect the Pound and Euro.

Reports indicate that while FCA's crypto assets guidance may seem relatively harmless as it is just a warning, regulatory authorities may take stricter action in the future. In July, FCA was proposing to ban "crypto derivative sales targeting retail investors," and it is understood that the proposal is still ongoing.

Related Reading

  • Ripple Respects Regulators, But Crypto Industry Needs Different Regulations
  • By the End of 2020, Crypto Derivatives Could Be 20 Times the Spot Market

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