UK: one more in a row of countries that ban crypto?

Not yet, but it's on its way. In fact, this began a few months ago through regulation that "sought to protect the market, especially retail investors."

Responsible for this regulation was the Financial Conduct Authority (FCA) of the United Kingdom. She he pointed that cryptocurrencies were not suitable products for retail consumers basically for all the reasons why cryptocurrencies are traditionally criticized: (i) their valuation has no reliable basis, (ii) they offer conditions for the generation of financial crimes and market abuse, (iii) wide volatility, (iv) lack of crypto-financial culture in retail consumers.

According to Sheldon Mills, FCA's Executive Director of Strategy and Competition: “consumer protection is paramount. Significant price volatility, combined with the inherent difficulties of valuing crypto assets reliably, puts retail consumers at high risk of suffering losses from trading crypto derivatives. We have evidence that this is happening on a significant scaleI mean, 100% protectionism.

On the other hand, the banking sector agrees with the regulator (clearly because it favors its position). In that regard, UK bank HSBC has started to prevent its clients from transferring their crypto funds from exchanges to their bank accounts. Other banks have taken the same position by preventing their clients from being able to invest in crypto with their debit or credit cards, he noted. Bitcoin Journal.

The funny thing about the story? In September last year, documents from the US Financial Crimes Enforcement Network were leaked that implicated the HSBC bank for allowing criminals to transfer millions of dollars to different bank accounts around the world without raising any objection.

What happened now? Neil Liversidge, a British financial advisor, has petitioned the UK Parliament for a complete ban on crypto transactions. The request is as follows: “Legislate to prohibit the payment or acceptance of cryptocurrencies by companies or individuals resident in the United Kingdom, and require the United Kingdom regulators (the FCA and PRA) to prohibit the transactions of financial institutions of the United Kingdom. United Kingdom in cryptocurrencies like Bitcoin ”.

In other words, it is no longer just about protecting retail investors, but the focus also encompasses potential institutional investors with greater purchasing power.

What were your reasons? Basically everything noted above plus the allegation that "cryptocurrency mining is harmful to the environment" which is true, but I doubt that is their real motivation.

Just to understand the impact of these measures, what is the scope of the crypto market in the UK? Perhaps a sample of the businesses that accept payments in crypto could give us an idea of ​​the breadth of this market:

Source: Coinmap
Source: Coinmap

Certainly, we could not say that it is a "nascent" industry in the British market.

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Marilú Lazo
Lawyer from the Pontificia Universidad Católica del Perú (PUCP). Director of The Crypto Legal Blog, she has experience in corporate advice, consumer protection, as well as in matters of personal data protection and new technologies.


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