Analyzing Brexit Ripple Effects Shows Tougher Bitcoin and Crypto Regulations as a Direct Result
Some people in the industry believed that the Brexit would be good for Bitcoin. With all the uncertainty that the British markets are facing right now, there was some space for investments in non-traditional assets like Bitcoin. However, it seems that the idea backfired.
The lawmakers of the country may not be ready to decide what they will do with their country yet but it looks like the financial watchdogs of the United Kingdom are sure about one thing: they want to regulate Bitcoin and other cryptos more post-Brexit.
According to a new report from the Financial Conduct Authority, which delimitates its business plan for 2019 to 2020, the regulator believes that their enforcement powers should be used on Bitcoin ahead of Brexit. The CEO of FCA, Andrew Bailey, knows that Brexit is the most immediate issue, but the agency is also keen on regulating Bitcoin more.
However, before the agency is able to regulate Bitcoin more, the members want to hold a process of public consultation. Then, they will publish feedback and regulate the industry more in order to go after financial crimes and to make the industry safer.
Another point of the report was that the blockchain technology, the tech that underpins cryptos, is evolving very fast and becoming more widely used. Because of this, the entity has been interested in understanding it more and to identify the benefits and risks that the blockchain can bring to the market, as well as to decide whether or not to intervene in its regulation in the country.
At the moment, one of the main risks that were seen by the agency is anonymous transactions. They believe that they will be used to commit financial crimes and want to prevent them from being used this way. Another point is that quantum computing, a technology that is also moving forward recently, could impact the security of the encrypted networks.
Taking past research made by the FCA as a north, it does not look like the agency should be so worried about financial crimes, though, as the main reason why people are buying BTC in the U. K. is to get rich quick (which is, on itself, another aspect that the entity should be keen on investigating).
It looks like most people buying crypto in the country are actually driven by hype. They often do not make their own research before buying the assets and are influenced by social media personalities. Despite Bitcoin being generally a great investment, you will be putting yourself in danger by simply investing it without making your own research.
Therefore, the agency is already thinking on some measures to “protect the consumers”. One of them is to limit leverage trading to 2:1 on crypto derivative products.
The report was made by the FCA, the Cryptoassets Taskforce of the country and the Bank of England, as well as members from the finance ministry.