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UK watchdog reviews cryptocurrencies

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Despite Brexit stretching their resources, Britain’s markets watchdog will publish a review of cryptocurrencies in the third quarter.

Cryptocurrencies such as bitcoin have seen sharp swings in value, triggering concern among regulators.

While the cryptocurrencies themselves don’t come under the regulatory limit, it is the use of them that does, according to the Financial Conduct Authority (FCA)  in its business plan for the coming financial year.

 “We will work with the Bank of England and the Treasury as part of a taskforce to develop thinking and publish a discussion paper later this year outlining our policy thinking on cryptocurrencies,” the FCA said in the plan published on Monday.

This is not an isolated incident as regulators and central bankers across the world have warned retail investors about the dangers of investing in cryptocurrencies, saying they could lose all their money.

On Friday, the FCA said firms offering services linked to cryptocurrency derivatives must meet all relevant rules in the regulator’s handbook or could face sanctions.

The business plan set out several areas the watchdog will study in coming months, though it cautioned resources would be stretched by having to deal with the implications on the financial sector of Britain’s withdrawal from the European Union next year.

“We recognize that this year we need to dedicate a significant amount of resource to withdrawal from the EU,” FCA Chief Executive Andrew Bailey said.

“As a result, setting our priorities this year has involved a particularly rigorous level of scrutiny and challenge to focus on areas where we see the greatest potential for harm.”

“We will closely monitor the progress of negotiations and the potential for any further impact on our cost base,” the FCA said.

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