Some firms in the sector were evasive, with near deliberate
multiple conflicts of interest and huge issues around proper
safeguarding of customer assets, Alder told parliament's
Treasury Select Committee.
Regulators have taken a harder line on the sector have a
crash in bitcoin values, and the collapse of crypto exchange FTX
highlighted how many activities were conducted under one roof
without safeguards.
The FCA and police have also swooped on suspect illegal
crypto cashpoints in London to protect consumers.
Alder was asked by lawmakers to respond to a letter from his
predecessor, Charles Randell, to the committee in which he said
that "speculative crypto is gambling pure and simple", and
should be regulated and taxed as such, with levies to support
debt advice and addiction services.
"If the issue and trading of speculative crypto are instead
treated as financial services, conferring the 'halo' of
financial services regulation, then increased consumer loss and
calls for compensation provided by taxpayers or financial
services levy payers will inevitably follow," Randell wrote.
(Reporting by Huw Jones;Editing by Elaine Hardcastle)
By Huw Jones
LONDON, March 8 (Reuters) - Tough rules were needed to
"detoxify" crypto to remove conflicts of interest, safeguard
customer assets and force through radical changes to business
models, Britain's financial watchdog said on Wednesday.
The Financial Conduct Authority's new chair Ashley Alder
said rules for crypto should be just as tough as for risky
activities in mainstream finance. Britain plans to regulate
crypto under a new financial services law this year.
A regulatory regime the same as for conventional finance
would see crypto business models change radically, Alder said.
"One of the questions in my mind is when you put in place a
regulatory framework around crypto, the interesting aspect is
the degree to which crypto will need to adapt and effectively
detoxify to fit into that regime," he added.
Some 85% of crypto firms who applied for permission to
operate in Britain were rejected by the FCA because they could
not comply with basic anti-money laundering safeguards.
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