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The UK’s financial regulator, the Financial Conduct Authority (FCA), faces constant criticism. from British parliamentarians and the member of the crypto industry It seems their stance on strict regulation and hence utopian aspirations to become a hub for cryptocurrencies in the years to come. For example, his one major allegation against the FCA involves slow approval of licenses for cryptocurrency companies.
But the latest news shows the UK moving from a piecemeal approach to sound regulation. This was after the House passed the amendment. Financial Services and Markets Bill On October 25, 2022, changes were made to advance cryptocurrencies into the realm of regulated financial services. This means cryptocurrency companies must follow government regulations to protect consumers. Violations also tend to result in fines and loss of license.
The authorities should not deviate from their idea and vision of making the UK an international hub for cryptocurrencies and digital assets. Considering all the criticisms facing the FCA, and without denying its validity, we encourage you to look at the situation from a different angle.
Interest in digital assets is on the rise, attracting the attention of policy makers and regulators around the world. We have witnessed various regulatory advances. Market in Crypto-Assets (MiCA) Tentative Agreement Europe and Framework for International Engagement on Digital Assets in the United States. This represents an effort and desire to bring regulation clarity in the crypto market. However, safety and consumer protection are among the major concerns and gaps in this market, and sound regulation is desperately needed.
Putting consumer protection at the heart of regulation is easy and effective. One of the drawbacks of the crypto market is the existence of scams and Ponzi schemes that cost investors billions of dollars in losses each year. Market manipulation is another challenge. Regulation helps to prioritize addressing unfair trade practices/conduct and protecting consumers from fraud and manipulation. As a result, it keeps bad actors out and increases the confidence of investors entering the market.
More importantly, regulatory frameworks are essential in setting standards for cybersecurity and user data protection in the crypto space. Regulators can implement measures or provide guidance to protect assets against increasing cyber threats, fraud and hacking by genuine investors.
As a result, sufficient regulation could increase user safety and influence mass/mainstream adoption of crypto assets. This is a win-win situation for investors and cryptocurrency companies.
On the other hand, some countries have low barriers to entry. For example, it is difficult for users to filter crypto companies because Dubai does not have strict regulations and there is no filter against crypto companies.there are several report At least 30-50 major crypto entrepreneurs have moved their operations to Dubai and other crypto-friendly jurisdictions. Unfortunately, cryptocurrency scammers and scammers prefer to operate in an unregulated environment with minimal oversight of such activities and asset classes.
Unlike Dubai, the UK has a long-standing and sustainable financial system. As such, regulators are looking at cryptocurrencies and related processes through the prism of traditional finance. The UK has been a strong global financial center for decades and has played a key role in shaping financial regulation after the financial crisis. More importantly, they know all the risks that rushing brings. So it’s good that the UK is slowly moving cautiously towards becoming an innovation hub.
fraudulent earnings Throughout 2022, the downward trend associated with falling digital asset prices has made the investment opportunity in cryptocurrencies less attractive. But despite the biggest expected crash, scams are rampant in many forms, from investments and phishing, fake cryptocurrency exchanges/wallets to his SIM-Swap scam.
research A study by Group-IB found that the first half of 2022 saw a five-fold (335%) increase in the number of fake domains associated with crypto giveaway scams compared to 2021 as a whole. Q3 report According to Certik research, approximately 58% of all frauds occurring on Web 3.0 platforms in Q3 2022 were exit/lag pull frauds, robbing investors of more than $56 million. Recently, according to data from the UK police unit Action Fraud, Crypto fraud increased by 32% About $273 million within a year.
Despite the potential to kill innovation, the cryptocurrency fraud problem is vast. There are more scam projects out there than “great ideas”. Senior Financial Crimes Attorney Jo Torode said: Cryptocurrencies need regulation Don’t stifle innovation. He further outlined that proper regulation would provide legal and regulatory protections for retail investors and high street customers.
This means that user protection should be your priority. Especially think about the financial side and the possibility of losing everything before it’s too late. For example, when targeted advertising appeared, governments did not understand the value and volume of regulation, so no regulation was imposed. Currently, countries are imposing post-facto regulations. As a result, user safety has already been compromised, privacy issues It is on the rise among consumers.
So what makes it different from crypto? Is it worth imposing regulation after the fact when the harm is already done? A more pragmatic approach may be to act with caution and think more about the people involved and their safety. With this in mind, FCA may be right to pay attention in the first place rather than correcting avoidable mistakes in the future.
With crypto enthusiast Rishi Sunak appointed as Prime Minister, it will be an exciting time to see what impact this will have on crypto politics in the country.
The FCA takes a conservative approach to regulation, but it may be right at the same time. The more generous you are, the easier it is to have more room for fraud, and the value is enormous. Instead, user protection should be a priority.
More importantly, it’s better to be careful in the first place than to tackle mistakes later. It lays a good foundation for the future if you want a long-term relationship with cryptocurrencies.
Nevertheless, while FCA and UK officials should stop making loud statements, they admit they are already in the learning and adoption phase. There is still a lot of work to be done.
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