A report by the Sunday Telegraph reveals that the United Kingdom’s financial overseer, the Financial Conduct Authority (FCA), has been investigating 67 cryptocurrency companies in the country since early November.
The data, which was gathered through a freedom of information request, indicates a growing concern within the FCA regarding the use of cryptocurrencies in the UK. It is believed that the regulator considers cryptocurrencies to carry increased investment risks and pose potential threats to financial markets. Of the 67 firms being investigated, 49 inquiries have already been closed – although several have been issued with consumer alerts. The FCA has not released the names of the remaining 18 companies still under scrutiny.
The cryptocurrency industry in the UK remains only partially regulated and the government has voiced its intentions to improve upon this. The FCA’s executive director of strategy and competition, Christopher Woolard, noted that, along with the Bank of England, the agency is in support of cryptocurrencies and intends to help it grow. However, its main concern at present is the perceived risks posed by financial instruments such as derivatives. Earlier this year the FCA announced plans to ban the sale of cryptocurrency contracts-for-difference (CFD’s), a specific type of derivative considered especially risky to retail investors.
The UK trade association, CryptoUK, said it supports the introduction of proportionate regulation.
“We will be working closely with policymakers, including in the FCA, to develop new regulation that strikes the balance between ending bad practice and enabling this exciting industry to flourish.”
As 2018 comes to a close, the cryptocurrency industry continues to struggle through a year-long bear market. From an all-time high of over $800 billion in January this year, the market is now worth only $125 billion, a 78 percent decline. However, despite the decline, interest amongst both retail and institutional investors continues to grow and many believe the technology has a bright future.