The chief executive of the United Kingdom’s primary financial regulator has called for a balanced approach in nurturing the benefits while narrowing out the risks of cryptocurrencies.
In a speech during the regulator’s Annual Public Meeting on Tuesday, Financial Conduct Authority (FCA) chief Andrew Bailey outlined four specifically chosen operational risks that figure within the regulator’s ongoing work.
The impact of ‘technological change and innovation’ is one among them and the regulator is taking a measured approach to “firmly” support innovation while countering the threats they may pose, Bailey explained.
Pointedly, he referenced cryptocurrencies as an example of new financial innovation. In some contrast to the usual soundbite offered by regulatory counterparts around the world, Bailey insisted ‘cryptoassets’ mattered in the financial ecosystem while talking up the potential of blockchain technology.
“A good example of this is crypto assets. We are keen to see the potential of their underlying technology, and do not rule out roles for cryptoassets themselves.”
To balance the view, Bailey stressed that their “risks are evident too”, citing price volatility and a lack of understanding by investors adopting cryptocurrencies speculatively.
“We are working closely with the Treasury and Bank of England to assess these issues and come up with appropriate responses,” he added.
The official is referencing the British government’s ‘Cryptoassets Task Force’, first announced in March this year. The working group includes Her Majesty’s Treasury, the Bank of England and the Financial Conduct Authority coming together to study the benefits and risks of cryptocurrencies and blockchain technology.
The high-profile task force held its first meeting in May to set out key objectives including understanding the impact of cryptocurrencies in society.
Earlier in June, the FCA dispatched letters to CEOs of domestic banks to follow good practices with “enhanced scrutiny” of clients who “derive significant business activities or revenues from crypto-related activities.”
Featured image from Youtube/Bloomberg Markets and Finance.