The Financial Conduct Authority (FCA) of the UK, responsible for regulating the nation’s financial sector, has unveiled proposals aimed at enhancing the “UK investment culture” and is seeking input from the cryptocurrency industry.
In discussion and consultation documents published on Monday, the FCA invited crypto entities to share their thoughts on initiatives focused on “broadening consumer access to investments” as well as revising rules concerning “client categorization and conflicts of interest.”
The discussion paper highlighted that “almost all of the underperformance on high [digital engagement practices] apps can be linked to trading in cryptoassets and [contracts for difference].” The proposal pointed out potential consumer risks associated with using “cryptoasset proxies” that lack investment limits, warnings, or “appropriateness tests.”
Within its consultation document, the UK regulator suggested:
“We will also introduce guidance stating that a personal investment history primarily involving speculative high-risk or leveraged products or crypto assets is generally not a measure of professional competency, unless robust evidence indicates that the client satisfies the criteria of a professional client from other Relevant Factors, including the client’s ability to endure potential losses.”
As per the regulator, the suggested modifications would simplify the FCA’s current guidelines and are part of a strategy aimed at potentially “eliminating some arbitrary tests and granting firms greater responsibility to make accurate decisions.”
Firms that provided advice to clients on or marketed digital assets were requested to submit their feedback on the proposals by February and March.
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Gradual progress toward cryptocurrency-friendly policies
The UK has emerged as a major center for crypto enterprises operating outside the United States, where the regulatory landscape has been perceived as uncertain, especially following shifts in enforcement under former President Donald Trump.
In December, the UK government enacted a law categorizing digital assets as property, which clarified the legal standing of cryptocurrencies like Bitcoin (BTC) in instances such as the recovery of stolen assets or bankruptcy proceedings.
With the market consistently expanding within the nation, reports suggested that the government was contemplating a ban on crypto contributions to political parties.
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