Crypto assets have become "too big" for regulators and governments to ignore, according to ACA Group director of regulatory consulting Martin Lovick.
Speaking to FTAdviser, Lovick said that the Financial Conduct Authority will likely seek to get involved to warn people of the underlying risks of this sector.
“There does seem to be an upward trend over the last two or three years of significant amounts of fraudulent activity and that is an area of concern as well,” he said.
In April, the FCA published its fee proposal document, in relation to its expansion to include crypto firms under its remit.
The regulator said its fees would be increased by £8mn and will go towards the costs of developing IT systems and recruiting extra staff for the project.
Although the FCA is not responsible for regulating how crypto firms conduct their business with consumers, they have recently been brought under the regulator’s supervision under the money laundering and terrorist financing regulations.
Lovick referred to the FCA’s statements in the past and the number of scams that involve cryptocurrencies in one form or another.
“It's got too big for regulators and governments to ignore,” he said. “A lot of the work has hitherto been done on sort of defining what exactly is a regulated investment.
“The Treasury refers to them as qualifying investments and that is part of the same trend to establish what exactly the authorities should be looking at in terms of introducing these new restrictions on the promotion of these products.”
He argued that the crypto sector is here to stay despite the recent market crash with crypto assets in recent weeks.
“Beyond that, I think it's a firm enough foothold that it's not going to go away in a hurry and my view is, regulators are entirely right to look at making sure that consumers are absolutely aware of the risks and not being fooled by promotions that are actually downright fraudulent.”
But advisers recently raised concerns about the fee hike following the regulator’s recent proposal to include crypto firms into its remit.
Some advisers hit back on why they should cover the cost of any failure for a product they would not or cannot recommend.
sonia.rach@ft.com
What do you think about the issues raised by this story? Email us on FTAletters@ft.com to let us know
