Britain to stop consumers who lend themselves to buy cryptocurrencies

Keep –Logs informed with free updates

Simply register —vos at Cryptocurrencies Myft Digest: Delivered directly to the inbox.

The United Kingdom Financial Watchdog is planning to stop retail investors who provide money to invest in cryptocurrencies like Bitcoin, as it seeks to bring much of the rapid growth digital asset market under regulatory supervision.

Restrictions on the loans for Crypting purchases are part of a set of exposed rules of the Financial Conduct Authority on Friday, a few days after the Government submitted its presentation plans to legislate for the digital asset market.

“Crypto is a potential growth area for the United Kingdom, but it has to be done well,” he told Financial Times David Geale, executive director of Digital Payments and Digital Finance. “To do it, we must provide an appropriate level of protection.”

Disappoining the claims of some Crypt assets companies that the FCA is hostile to its industry, Geale said: “In some ways, it would compare it with any other high -risk investment, that if there is often something less protections … we are open to business.”

FCA proposals aim to contribute much The Crypt Market Under its regulatory remittance, including commercial platforms, intermediaries, crypt assets and borrowers and decentralized finance systems. The plans apply a much tougher set of rules to the crypt services provided to retail investors who only deal with professional or sophisticated investors.

“We started from a position to develop something safe and competitive,” said Geale. “If we can get the regulatory regime correct, it really becomes attractive to companies. This is what we try to achieve.”

The FCA said that it was planning to restrict consumers loans to finance their crypt purchases, included through credit cards, due to the regulator’s concern for “unsustainable debt, especially if the value of its low crypt asset and were based on their value to pay.”

The proportion of people in the United Kingdom financed by Crypto purchases through the loan has been more than duplicate from 6 % by 2022 to 14 percent last year, according to a recent Youugov survey.

The FCA also said it was planning to prevent retail investors from accessing specialized lenders and borrowers Network of Celsius, which collapsed In 2022 in the middle of a wider crisis in the sector.

The regulator made a number of concerns about the market for negotiating crypt assets, such as market manipulation, conflicts of interest, liquidation failures, lack of transparency, illicity and unreliable negotiation systems.

To deal with some of these, the FCA will require crypt trade platforms to treat all shops equally, to separate their own negotiation activities that are carried out for those performed for retail investors and to provide transparency in prices and the execution of operations.

Commercial platforms will be prohibited from paying intermediaries for the flow of orders and will require all companies that offer the Crypt of Consumers in the United Kingdom to operate through an authorized legal entity in the country.

Consumers who park their assets crypto with “establishment services” in exchange for a return must be refunded by the losses caused by third party shares.

Decentralized funding systems, which do not have any centralized operation and work exclusively on computer code lines, will be exempt from the new FCA regulations unless they have a “clear control person”.

While warning “most cryptographic assets will continue to be a high risk: speculative investments and consumers should be ready to lose all their money if they buy them,” the FCA said that their goal was to “foster growth as far as possible.”

Crypt companies have been frustrated with the FCA for the high level of rejection in the regulator’s regime regime for compliance with their rules against money laundering.

The regulator rejected 86 percent of these applications during the 12 months until April 2024, but in the last exercise this proportion fell to 75 percent.

Crypto executives supported the focus of FCA in consumer protection.

“As a regulator as internationally influential, as soon as the FCA begins to regulate the Crypt Market, they give it a massive stamp of approval, so I understand its precaution,” said Joey Garcia, head of public affairs of the Bank Xapo Bank, a Gibraltar crypt custody.

Riccardo Tordera-Ricchi, director of Policy and Government Relations of the Payments Association, a commercial body, said: “The Government says it is open for business, but in practical terms it will be difficult for FCA to implement it; they do not have easy work.”

Companies have until June 13 to respond to FCA proposals.