Legislation

The CEO and chairman of the United Kingdom's financial regulator took a grim tone as they discussed crypto regulation but conceded that they’re the ones who have to do it.

Officials of the United Kingdom’s Financial Conduct Authority (FCA) appeared before the House of Commons’ Treasury Committee on March 8 to discuss the agency’s work. Among the issues raised was cryptocurrency regulation, which the officials approached with a clear lack of enthusiasm.

FCA chair Ashley Alder, who took that position in February after serving as CEO of Hong Kong’s Securities and Futures Commission, told the committee that the FCA is “midway through a quite ambitious reset” as the Financial Services and Markets bill makes its way through the Parliament. He and CEO Nikhil Rathi answered questions on predatory lending, mortgage rates and a number of other topics before addressing crypto in the final minutes of the hearing.

Former FCA chair Charles Randell sent a letter to the committee saying “speculative crypto is gambling pure and simple and it should be regulated and taxed as such.” Alder responded that globally “this is not going to be looked at from a regulatory perspective other than by financial regulators.” Financial regulation “needs to be appropriately tough,” Alder added.

If the principle of “same risk, same regulation” were applied to crypto businesses, Alder said:

“The interesting aspect to this is the degree to which crypto would need to adapt and effectively detoxify in order to fit within that regime.”

When asked if regulation “undeservedly legitimizes” crypto, Alder responded, “I agree,” but said public policy issues such as money laundering cannot be tackled without regulation.

Related: UK’s FCA hints at why it’s only given 15% of crypto firms the regulatory nod

The Financial Services and Markets Act, when passed, would give the FCA new regulatory powers over the crypto currency industry, but not eliminate the risks posed by cryptocurrency. Rathi said, “We are not going to be able to put in place a framework that protects consumers from losses.”

On Wednesday, we’ll be scrutinising the work of @TheFCA. We’ll hear from Chief Executive Nikhil Rathi and Chair Ashley Alder.

Find out more about the session https://t.co/jcmn1lrQJv pic.twitter.com/AA1Fv7prE9

— Treasury Committee (@CommonsTreasury) March 3, 2023

Most British crypto holders own no more than “several hundred pounds’” worth of cryptocurrency, he added.

The Financial Services and Markets Act was introduced into Parliament in July and amended in October to expand crypto regulatory provisions.