UK Regulatory Body Conducting 50 Crypto-Related Investigations, Up 100% Since May

Colin Muller
  • UK's FCA conducting 50 investigations into unauthorized financial services
  • Increased rate of "whistlebowing" of employees of business-related companies

Following the yearlong collapse in cryptoasset prices, the UK’s Financial Conduct Authority (FCA) is now conducting twice as many crypto-related investigations than it was in May of this year, according to reporting done by the UK Telegraph paper.

The FCA are investigating 50 firms which it believes are operating illegally in a financial services capacity without the organization’s permission, up from 24 earlier in the year. Seven so-called whistleblowing reports have been filed to the FCA by employees of crypto-businesses this year.

According to a source speaking to the Telegraph, this is perhaps due to an uptick in complaints of fraud from disgruntled investors.

Regulatory Clarity Still Lacking

CryptoGlobe reported in October that the FCA had been preparing to refine their position on regulation of cryptoasset exchanges, in a preparation to possibly expand regulatory oversight beyond exchanges only dealing with cryptoasset derivative products, such as securities and futures.

A “Taskforce” had by mid-October been formed by the FCA to tackle these questions. It has since then published a report on the subject of cryptoassets and the UK government’s regulatory remit.

The report however, seems only to be preliminary. It concluded that the considerations should be extended into 2019, to decide “whether the regulatory perimeter requires extension in relation to cryptoassets that have comparable features to specified investments but that fall outside the perimeter,” e.g. non-derivative products.

There is, therefore, no definitive indication that the uptick in investigations is due to any change in policy. At this juncture, the UK government does not have a general regulatory framework for dealing with cryptoasset exchanges and tokens, but will “issue a consultation in early 2019” in order to develop one.

For now, they will simply continue to warn investors of the risks, and “monitor [crypto’s] potential implications for financial stability.”

Brazil’s Securities Watchdog Blocks Binance From Offering Derivatives

  • Brazil's SEC has blocked Binance from offering derivatives products in the country.
  • Brazilian regulators ruled that derivative contracts are securities, regardless of whether they involve crypto-assets. 

Brazil’s equivalent of the U.S. Securities and Exchange Commission, the Comissão de Valores Mobiliários (CVM), has blocked leading cryptocurrency exchange Binance from offering derivative products in the country. 

According to an order published July 6, reported on by local news outlet Portal do Bitcoin, Brazilian regulators claimed derivative contracts are securities, regardless of whether the underlying assets are cryptocurrencies. 

The order reads, 

It remains evident that there are indications that the company BINANCE FUTURES, through the page '"www.binance.com" on the world wide web, captures customers residing in Brazil with a public offering of derivative intermediation services.

The order continued, adding that Binance “does not hold authorization” to act as an intermediary for securities in the country. 

The CVM determined that Binance must immediately suspend the “broadcasting of any public offering of securities intermediation services,” including derivatives products or else face a daily fine of R $1,000 ($186). 

The order fails to clarify whether Binance’s spot trading services will continue to be allowed to operate in Brazil, as opposed to only banning their derivative offerings. 

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