The United Kingdom’s Financial Conduct Authority (FCA) has introduced few new rules to handle the rapidly growing cryptocurrency market. One of these new rules will prevent regular people from borrowing money, such as using credit cards, to purchase cryptocurrencies like Bitcoin.
The goal of the FCA is to protect people from getting into debt that they can’t handle in the future, especially if crypto prices drop suddenly. A survey by YouGov found that 14% of UK crypto buyers used borrowed money last year, compared to 6% in 2022, showing the problem is growing.
The UK’s Financial Conduct Authority (FCA) is setting new rules for cryptocurrency businesses, like trading platforms, middlemen, and crypto lenders. These rules are tougher for regular people, such as retail investors, than for professional investors.
As per the reports, the FCA will also ban platforms from paying for order flow and require UK crypto firms to operate through authorized local entities. Staking services must reimburse losses from third-party actions.
FCA has made new rules for cryptocurrencies, but these rules are not applicable to decentralized finance (DeFi) systems that don’t have a single person or company in charge. The firm has also warned that crypto is very risky, and people could lose all their money in it.
However, they also want to support the crypto industry’s growth in the UK while keeping it safe. David Geale from the FCA said crypto could be beneficial for the UK, but it needs to be done properly. He denied that the FCA is against the crypto industry, showing they want to balance safety with growth.
The FCA is also going to take initiatives to stop retail access to specialist crypto lenders like Celsius Network, which has already collapsed in the year 2022. Crypto firms have already faced challenges with the FCA’s anti-money laundering rules, with 75% of applications rejected last year, down from 86%.
Apart from all this, many industry leaders, like Xapo Bank’s Joey Garcia, are supporting the FCA’s cautious approach, citing its international impact.
