Summary:
- The UK’s top financial regulator hopes to cap crypto holdings at 10% of the investors’ net assets.
- A ban on referral bonuses could also be implemented. Britain’s FCA unveiled the move in a policy document released on Monday.
- Recent crashes in the market and turbulent times for crypto lenders and exchanges supposedly triggered the FCA’s decision.
- Authorities declared intentions to position the UK as a global crypto-asset hub back in April.
- Stablecoin regulations were also a component of the policy package released earlier in 2022.
- The FCA also has tighter crypto marketing law in its view, per reports.
- Regulators first announced the possibility back in January.
Britain’s Financial Conduct Authority published an updated policy document geared toward capping the amount of cryptocurrency held by investors at 10% of net assets as the regulatory aims to protect citizens from harsh market conditions and crypto contagion.
Also, the document released on Monday revealed a ban on referral bonuses. This move could cut out rewards for existing users who refer new users to crypto services or exchanges.
Monday’s update comes amid the uncertainty in the broader crypto market following a slump in asset prices and the collapse of Terra’s tokens – LUNA Classic and TerraUSD which wiped out over $40 billion in investor funds. The contagion spread through the digital asset industry shortly after as a plethora of crypto companies disclosed difficulties.
Crypto firms like Coinbase announced staff layoffs while other companies like Celsius and Three Arrows Capital face more intense financial situations.
Although the UK announced plans to develop into a crypto asset hub, authorities are also reportedly concerned about risk assets and consider investor protection as a priority. The FCA’s executive markets director Sarah Pritchard opined that the agency must encourage clarity between investors and companies offering crypto facilities.
The FCA is also waiting on the government to implement policies that widen the agency’s enforcement radar and brings a broader scope of digital assets under its purview.
British FCA Cracks Down On Crypto Marketing And Risk Asset Promotion
In addition to a cap on crypto holdings, the FCA also has eyes on tighter crypto marketing and financial promotions laws. The agency is also waiting for the government to approve laws geared toward this effect.
Authorities first hinted at bringing crypto advertising under the purview of the FCA in January 2022. The possibility was further bolstered in the wake of recent events happening across the cryptocurrency market.
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