Financial regulators in the UK are cracking down on crypto apps this month with hundreds applying for their registration with only 33 have been authorised and 12 other firms have been given strict deadlines. We put together everything you need to know about how it could affect you 🔒
PSA: This isn’t your run-of-the-mill bitesize Bitcoin blog. While discussing financial regulation for many of you might have all the vibes of a GCSE General Studies class, the topic pretty much affects every financial move you make, so it’s important to talk about - especially when there are big changes on their way. On that note, we’ve tried to make this a little lighter than the topic itself, while still covering all the important bits you need to know, so get your pen and pad ready - there could be a quiz at the end of class.
The FCA (Financial Conduct Authority) regulates the financial services in the UK, and, by law, has an objective to protect consumers like you and me. While the FCA works to regulate and encourage accountability across all financial sectors, as it is an independent institute its authority is limited.
When it comes to cryptocurrencies, it’s often thought there’s higher exposure to risk than with other financial products (largely due to a lack of understanding about and education around the ecosystem), and due to the rapid pace of growth the crypto space has seen over the past year, more and more products have become available with little to no regulation imposed on them.
Now, if you know a little about crypto already, I’ll take a shot at guessing your thoughts here:
Crypto? Regulation? Doesn’t that go against the whole idea of cryptocurrency?
The answer is yes... and no. When Satoshi Nakamoto wrote his white papers about the first-ever cryptocurrency (Bitcoin of course) on the first-ever Blockchain, the idea was to create a decentralised monetary system that would have resistance against misuse and corruption. Decentralisation would mean there would be no central government managing the currency who could print it on demand and drive inflation, and no central banks who could misuse money stored in their institute (Bitcoin was born as a reaction to the 2008 economic crash caused by this financial mismanagement).
To put it simply, removing centralised governance over our hard-earned money was at the core of crypto’s creation. So when we talk about regulating the industry, it sounds a little out-of-touch, right?
Now, this is where the finer details matter. Notice we used the word ‘industry’ just there? That plays a key role in the reasoning behind the growing demand for regulation. See, crypto is no longer just an asset class. Since its formation back in 2008, the ecosystem has evolved on a massive scale, and grown into a fully-functioning industry sector that hosts literally thousands of different products and services worldwide. Although offering the same decentralised cryptocurrencies we keep harping on about, many of the organisations (like us) offering these services function much like traditional financial services, with a human team at the core of operations and some level of management over their customers’ access to funds. Arguably, these services would be considered centralised - and without any regulation, that’s where things get a little problematic.
A quick side note: regulation in crypto is a huge topic with some major, conflicted points around centralised control of people’s assets, tax uncertainty, and issues the likes of money laundering - but as a customer-focused business with our goals set on enabling access to crypto for all, we think the important points to touch on here are those that might affect you directly.
The growth of the industry is awesome. For lots of crypto beginners, there are products and services that offer an opening into the world of crypto by taking away the tough parts and making access and availability super user-friendly. This is great, but without some level of regulation in the space, the organisations behind the services are held to little accountability or responsibility for how their products - or actions related to their products - might negatively affect customers.
For those seeking to enter the space or diversify how and where they acquire and hold crypto, avoiding services that might be misleading, lacking transparency, or offering unreliable products would be the go-to process of making a choice, but with around 350 products to choose from in the UK - this can be a little difficult, especially if you don’t totally know what you’re doing.
That’s where regulators and standards authorities step in. When you’re searching for a new product to use, any service that’s registered with the FCA is held to specific standards, and authorities like the Advertising Standards Authority (ASA) work to protect consumers from misleading messages and unreliable products. This means that the more an organisation strives to comply with these standards, the more you can be sure that the product you’re seeing is legitimate and trustworthy.
The FCA is working on improving consumer protections across the board for UK crypto services - a necessary step in maturing the market - but with lots of work to be done, this is likely to take a little time. If you’re worried about where to start in the world of crypto, a good first step is to familiarise yourself with the company and services you’re using, and, as ever, we always believe it's best to do your own research.
Offering protection to customers is key at Mode. That’s why we’re one of 34 cryptoasset firms currently registered with the FCA in the UK, and we’re set on doing everything we can to keep building a trustworthy and reliable platform for our customers.
Fibermode t/a Mode is FCA registered as a Cryptoasset firm (FCA 928786). Bitcoin is not regulated in the UK. The value of Bitcoin can go up or down (or can drop to zero), and there can be a substantial risk you lose money. No FSCS/FOS protection. Capital gains may be subject to CGT. 18+ UK residents only. KYC required.We do not offer financial advice. More on risk associated with Bitcoin trading 👉 https://www.modeapp.com/protection.
Fibermode t/a Mode is FCA registered as a Cryptoasset firm (FCA 928786). Bitcoin is not regulated in the UK. The value of Bitcoin can go up or down (or can drop to zero), and there can be a substantial risk you lose money. No FSCS/FOS protection. Capital gains may be subject to CGT. 18+ UK residents only. KYC required. We do not offer financial advice. More on risk associated with Bitcoin trading 👉 https://www.modeapp.com/protection.
This website and its contents do not constitute or form part of, and should not be construed as, any offer for sale or subscription of, or solicitation or any offer to buy or subscribe for or otherwise acquire, securities or tokens in any jurisdiction, or an inducement to enter into investment activity.
Fibermode Limited does not provide advice to clients. Please seek your own legal, tax or investment advice as you deem appropriate.
Fibermode is a Registered Cryptoasset firm and is registered with the UK Financial Conduct Authority, pursuant to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, as amended.
Mode Global Holdings PLC (“Mode”): company number 12794676. Mode’s subsidiaries: Mode Global Limited, JGOO Limited and Fibermode Limited, the Mode group. Registered office of Mode its subsidiaries: Finsgate, 5-7 Cranwood Street, London, EC1V 9EE, United Kingdom.