Financial organisations offering services linked to cryptocurrencies such as Bitcoin will require regulatory approval, the FCA said recently.
The Financial Conduct Authority said that platforms dealing or advising on digital currencies must follow the new rules. Unauthorised firms would face newly imposed penalties opening further debate on the landscape created by the FCA.
Whilst cryptocurrencies are yet to be regulated by the FCA, it has advised companies that they need the approval to deal, arrange or advise on transactions or to issue tokens in ICO’s.
Interest surged last year as the value of Bitcoin soared from less than $500 to $20,000, turning some of its early traders into billionaires within months. The volatile bitcoin is currently trading north of $7,500.
The FCA also added that firms would require approval if they were to offer cryptocurrency futures, CFDs or any financial bets on movements in assets covering cryptocurrencies.
“It is the firms’ responsibility to ensure that they have the appropriate authorisation and permission to carry on regulated activity,” it said. “If your firm is not authorised by the FCA and is offering products or services requiring authorisation, it is considered a criminal offence, authorised firms offering these products without the appropriate permission may be subject to legal action.
It will be interesting to see how this plays out, will this make Trading cryptocurrencies even more volatile (if that’s at all possible) or will we find the addition of much-needed compliance, helping smooth out the knee jerking of the value moves.