Commons Treasury Committee report on crypto-assets

The House of Commons Treasury Committee published its report on crypto-assets. The report relates to the digital currencies inquiry the Committee launched earlier this year.

The Committee considered crypto-assets and initial coin offerings to be extremely risky and investors should be prepared to lose all their money. Crypto-asset markets are particularly vulnerable to manipulation and the current absence of regulation in this area is problematic. Self-regulation within the crypto-asset industry is insufficient. The Committee suggests that extending the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 to cover this sector would be the quickest way of providing the FCA with the necessary powers to carry out its duties of protecting consumers and maintaining market integrity. It also noted that the adoption of the EU’s Fifth Anti-Money Laundering ("AML") Directive will require crypto-asset exchanges to comply with anti-money laundering and counter-terrorist financing rules. The Committee urged the UK Government to treat the transposition of the Directive as a priority and, in the event of a Brexit without a transition period, it would expect the Government to seek to replicate the provisions of the Directive into UK law as quickly as possible.

Despite the above risks, the Committee stated that, if the UK develops an appropriate and proportionate regulatory environment in this area and if future innovations prove themselves to be beneficial to society and industry, the UK could be well-placed to become a global centre for this activity. The crypto-asset market will need to adhere to high standards and not become associated with criminality. The Committee encouraged UK regulators to continue engaging with international bodies to ensure best practice is learned and applied.

Read: The report

FCA consults on new Global Financial Innovation Network 

The FCA has announced the formation of a Global Financial Innovation Network ("GFIN") to create a ‘global sandbox’ to assist innovative firms to interact with regulators and help them navigate between countries in the development of new ideas. The network will also create a new framework for co-operation between financial services regulator on innovation-related topics. None of the 12 GFIN members is from an EU country (save, for the moment, the UK).

The FCA is now consulting on a mission statement and related issues for the new GFIN. The consultation closes 14 October 2018.

Read: The GFIN consultation

FCA and CII create re-evaluation rest for regulated retail investment advisers

The FCA has collaborated with the Chartered Insurance Institute ("CII") to create a re-assessment test of the level 4 Diploma in Financial Planning. The CII will make the ‘Regulated Retail Investment Adviser Re-Evaluation’ available from 1 October 2018 and the assessment aims to raise the standards and competence of Financial Advisers. The FCA said it may use the test as a supervisory tool if it thinks it is appropriate to ask firms to re-test specific advisers.

Read: CII information on the diploma