Policymakers worldwide want to safeguard consumers from the volatility of cryptos.
Yesterday we reported efforts to regulate cryptocurrency in the U.S. Now there are efforts to do so in Europe.
A U.S. Senate committee has proposed legislation that would assign oversight of the two largest cryptocurrencies, Bitcoin and Ethereum, to the federal agency that regulates milk futures and interest-rate swaps. The U.K. seems to be following suit.
England’s financial regulator is pushing for changes that would encourage caps on individual Bitcoin holdings and limit how cryptocurrencies can be marketed, as it clamps down more broadly on retail investment in risky assets, reports Barron’s.
Firms are now required to use prominent warnings on high-risk investments and “refer a friend” bonuses are now banned, the U.K. Financial Conduct Authority (FCA) said Monday.
The regulator wants to reduce the number of people investing in assets that are riskier than they realize, and wants individual investors to allocate no more than 10% of their net assets to high-risk bets.
“We want people to be able to invest with confidence, understand the risks involved, and get the investments that are right for them which reflect their appetite for risk,” says the FCA’s executive director for markets Sarah Pritchard.
The final decisions on how the FCA will regulate digital-asset marketing are still in the lawmaking process, so the regulations do not immediately play a role in crypto investing.
“Consumers should only invest in cryptoassets if they understand the risks involved and are prepared to lose all of their money,” the FCA said in its report. “We expect to take a consistent approach to cryptoassets to that taken for other high‑risk investments.”