Euroviews. The patchwork of UK crypto regulation is still too complex to bring real benefit

euronews.com:

Yet another cryptocurrency scam has taken advantage of UK consumers. 

Last weekend, the North East Regional Organised Crime Unit (NEROCU) issued a fraud warning against Cosoin, an “investment app” that is, sadly, not much more than a Ponzi scheme. 

The continuing march of scams and frauds like this led to no surprise that last May, a UK Treasury committee “strongly recommended” that crypto trading for retail be regulated akin to gambling last year. 

Later in the summer, the UK Economic Secretary to the Treasury, Andrew Griffith, rejected this suggestion, and disagreed with their recommendation to “regulate retail trading and investment activity in unbacked cryptoassets as gambling rather than as a financial service.”

Yet, with an eye on continued consumer protection, the Financial Conduct Authority (FCA) in September 2023 shared a warning that cryptoasset firms market their services appropriately with the new rules coming into effect this year. 

These guidelines come alongside ones from the FCA already applying from 1 September for UK virtual asset services providers to possibly withhold transfers to and from jurisdictions not following the UN’s FATF Travel Rule.

In theory, this variety of rules, guidance and warnings creates a “Swiss-cheese” effect, which many became more familiar with during the pandemic. 

Overlapping actions and guidelines suggested by varying experts can create an ecosystem minimising risk through the strength of different approaches.

While effective with public health campaigns, this approach fails with technology. It makes knowing “what to do” an unnavigable regulatory labyrinth for citizens.

This complexity negatively impacts our GDP, educational system, and consumer protections too.

The UK needs clarity.