Won't Anyone Think of the UK Crypto Investor?

crypto talent is only getting more intense. But this environment in which politicians seem to be willing to make major concessions to the crypto industry gives rise to an important question. Who's standing up for consumer protections? Nikkil Ratti, who who runs the SCA, He doesn't have very much time for crypto and he says repeatedly that anyone who invests in crypto must exp to lose all their money. That's Bloomberg reporter Will Shore. He joins me now to share more

about the regulatory landscape for consumer protection in the UK. Well, thank you so much for joining us. Thank you. You have been reporting on the UK and UK financial services for a fair amount of time and more recently you have joined the shall we see slightly more chaotic crypto beats? Yeah, but that's right. Yeah, it's um. I've gone from covering Libel transition, which is all very dry regulation, to suddenly as a wild West world of crypto assets. Certainly a

popular phrase around here, wild West. So one of the areas of concern in that more chaotic environment is the idea of consumer protections and I'd love for you to share with our listeners a little bit more of your reporting on what that looks like or perhaps doesn't look like. In the UK. Yeah. I think the way to understand this first of all is that a lot of this is coming from the UK Financial Conducts Authority, which is the main city regulator. You mean the City of London exactly,

the City of London. Yeah, and so sort of understand understand the f c A, but you have to understand nikkil Ratti, who who runs the f c A. He he doesn't have very much time for crypto He grew up in a former ship building town in the northwest of England, um called Barrow in Finesse, where his his

dad was a local doctor and a magistrate. He grew up watching trials at the local magistrate's court and was influenced by his dad's work with people that come from poorer backgrounds, and he's not very receptive to anything that might be deemed a scam directed at the vulnerable or get rich scheme. We've seen an explosion among younger people

speculating on cryptocurrencies or other high risk investments. There was evidence too that, as with the game Stock episode, more people see investment as entertainment, behaving less rationally and more emotionally, egged on by anonymous and unaccountable social media influences. That's why we are creating an eleven million pound digital marketing campaign to warn them of the risks. As we have repeatedly made clear, investors in crypto assets should be prepared

to lose all their money. And that's a pretty big contrast to other folks in you know, sort of high positions of UK authority in government and regulation, you know, some of whom have been extremely enthusiastic about the possibilities for crypto and saying things like they want the UK to become a global hub for this asset class. That kind of messaging is coming primarily from the Treasury. This idea as Britain as a global hub for crypto tech.

It's something quite new. It's messaging that's quite new. I don't think they're necessarily like really detailed thought through ideas behind that position yet, And that's why I partly why it's the f c A which is still setting the tone.

But Britain obviously has like recently come out of the European Union and it's got this opportunity to remake its regulations, like away from the framework from Brussels, and I think among optimists there's a bit of a hope that this might mean the kind of regulatory reforms that might help blockchain projects to to take route a bit in Britain.

I think it's still quite early stages. What are some of the examples of the kinds of consumer protections that the SEA has either put into police or is considering. Over the past two years, the f c A has effectively banned Binance, the world's biggest crypto exchange by trading volume from the UK. It's denied permission for so called crypto a t m s, and it's made its standards for doing business so stringent that most digital currency companies that want to operate here are not able to do.

So it's all been to quite interestingly through anti money laundering rules which which weren't crafted obviously with the crypto industry and mind. So everything is being seen through that prism in the absence of more established set of rules that have been set up to deal specifically with crypto. In the absence of those rules, as you say, you're getting this kind of harder line, as it were, from

the FDA. Do you think there's a world in which if the Treasury does start to firm up a set of recommendations or even you know, policy or legislation, there may be like a meeting in the middle of these two approaches. I think that's probably right. The chief executive officer for Golden SAX International was speaking at a conference in London in April. He said that UK regulators could end up becoming world leaders in crafting rules for crypto,

provided that Britain moves fast. And there is certainly in interest among big banks in what blockchain technology might mean for the bond trade, for example, and whether it can be incorporated into the settlements in the bond trade. And I think probably that's what the Treasury is is getting at when it talks about Britain being a global hub for crypto technology rather than rather than crypto assets. At the moment, that's all in its very early stages. You

know what we've really got here. The narrative at the moment really is about protecting ordinary consumers from risky products that can swing very dramatically in price. To your point about that very nuanced distinction between the idea of a crypto asset, which might be something like a coin or a token or an n f T, and crypto technology, which is largely in kind of the context of the blockchain that you described, could have potentially interesting financial services regulations.

Most consumers are most likely to encounter like bitcoin in the wild rather than an internal blockchain project at a major investment bank. Yeah, that's exactly right, isn't it. I mean, the Treasury is talking effectively about a crypto industry that doesn't really exist yet. It's talking about a kind of utopian situation where Britain is a world leader on a technology that hasn't really taken route yet in the way

that the Treasury envitages um. Whereas like what the f c A is dealing with is the crypto industry as it stands, Thank you will, We'll be right back. I think that's such an important distinction, and one that seems to be very similar to the discussions that are happening here in the US with the SEC and the CFTC, the two biggest regulators that are attempting to kind of divvy up the world of crypto regulation between them. And then of course there are developments happening in the EU

as well. Can you talk a little bit more about what those look like compared with what you're seeing in the UK. One of the things that people say about the US versus the UK when it comes to regulating crypto is that at least in Britain, we know who is regulating crypto point, which is the Financial Conducts Authority, which effectively sympathizes the issue for people a lot, Whereas I think in America there are kind of wide questions about exactly which regulator is doing what when it comes

to digital assets. In terms of the European Union, so obviously, like Britain's not in the European Union anymore, each individual country is dealing with the crypto industry based on its own national laws again, you know, which haven't really been devised with with crypto in mind. European regulators want to see like a big pan European legislative framework put in place in order in order to deal with this and to standardize everything. There's no indication that that's going to

happen anytime soon. So to someding agree, I think crypto firms are trying to work out which particular part of the European Union might be more receptive to their approaches. So if you look at Binance, for example, they got regulatory approval from the French government and the Italians and the Italians, and as I understand they're they're seeking it in Germany as well. Um they've they've been over in Britain. They're making similar overtures um in in the UK. So

they ran pang. So the CEO was in town in early March for a dinner with people from the industry, people from government, a couple of a couple of politicians. By all accounts, um he it was something of a diplomatic offensive with them, you know, just trying to like warm people up, but build confidence, build confidence in the

idea of finance. At the moment, I mean, I think there's there is a big contrast between approach that France has taken and they approached the approach that you that the UK has taken when it comes to finance and the UK, you know, the UK is just taking seemed

to be taking a harder line. One of the interesting things about what you mentioned in terms of the EU as it will do, it's the European Union trying to get a big sweepye agreement that wraps in these twenty seven member states, is that is from a lot of folks in the crypto industry's perspective, like what they need right,

what they need is consistency. It's much harder, they say, for them to on a country by country or even in the US, on a state by state basis, be dealing with slightly different regulations depending on where they want to operate. Do you have a perspective on, you know, whether from folks in the industry or folks in the UK government or regulators, where where the UK is actually like trying to move closer to something that resembles an aligned global regulatory framework or that is still very much

each country to itself. Crypto firms are alive to that kind of rhetoric, which is coming out. But at the same time, I think they know that one of the things that's holding back the crypto industry is is a lack of like comprehensive standardized regulation that enables everyone to

deal with each other on equal terms. And I think there is a sense that, you know, by standardizing the rules, like not just in the European Union but sort of around the world, that that might be what it takes to to bring crypto in and to know, add a bit more respectability to it, bring it more, and bring it more into the mainstream. Thank you, Will, that was so interesting. You can find more of Will's reporting on the Bloomberg terminal on Bloomberg dot com or following him

on Twitter. He's at William Shaw five four six. It might feel like there's always some kind of election happening in the US, and that's because there is, Stephen. Local actions can happen every year, while congressional midterms occur every other year, allowing US voters to decide who will represent them. These elections really matter, and crypto executives are spending significant

amounts of money to influence them. In two for the very first time, political spending by major figures in the crypto industry eclipse the dollars being spent on influencing elections by more traditional donors like folks who work in big tech or pharmaceuticals. On the next episode of Bloomberg Crypto, report to Alison ver sprole joins me to share her reporting on why crypto is emerging as a significant financial

force in US politics. I'm Stacy Marie Ishmael, and this is Bloomberg Crypto, a daily podcast from Bloomberg and I Heart Radio. For more shows from I Heart Radio, visit the I Heart Radio app, Apple Podcasts, or wherever you get your podcasts. Email your questions, comments, or suggestions for the show to Crypto at Bloomberg dot net and you'll find us on Twitter at Crypto. The supervising producer of this episode is Vicky very Galina. Our producer is Mohammed Farouk,

Associate producer is Zan Absudiki. Associate producer is Thy Butler. Associate producer is Moses on Desta wonder At is our engineer. Bloomberg's head of Podcasts is Francesca Levi.