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City watchdog is honing in on crypto startups

Edmund Heaphy
Finance and news reporter
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The UK’s Financial Conduct Authority (FCA), which is considering a ban on certain cryptocurrency assets, is asking “a lot more questions” of crypto and blockchain startups, according to the head of regulation at a top crypto exchange.

The FCA has become a “very risk-averse regulator”, according to Nicholas du Cros of CoinShares.

“You ask anybody who is trying to get a new business authorised or get a new product authorised and they’re getting a lot more questions than they were 12 months ago from the FCA,” du Cros said.

CoinShares offers cryptoasset derivative products to investors, and also invests in start-ups.

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Du Cros raised concerns that the FCA had removed all mention of “technology neutrality” from its recently published guidance on cryptoasset regulation.

A previous draft had suggested that the watchdog would be agnostic or “neutral” about the type of technology used by firms.

Its absence from the final guidance, however, suggests that the choice of technology may influence the way the FCA applies its regulation.

Du Cros was speaking at FinTECH Talents, a London-based fintech festival.

The city watchdog is also considering a blanket ban on crypto-based derivatives for retail investors.

In July, the FCA said that such derivatives were “ill-suited to retail consumers who cannot reliably assess the value and risks”.

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Several unregulated exchanges offer cryptocurrency derivatives, but critics of the proposal say that the ban would affect even regulated exchanges.

Industry bodies have reacted swiftly to the plan, and CoinShares in September urged its clients to use a ready-made template on its website to contact the FCA to advise against the ban.

CoinShares’ publicly traded crypto exchange-traded-notes are regulated by Sweden’s financial supervisory authority.

The FCA is expected to announce its conclusion in early 2020.

Yahoo Finance UK is proud to be a media partner for FinTECH Talents — the ultimate global fintech festival in London 11-13 November 2019. There are 3,000 festival-goers + 1,500 innovators representing over 400 different financial services institutions + Rockstar speakers & steering committee members + Over 50 hours of content sessions + Game changing tech companies + The talent of tomorrow + Craft beer and live music sessions.