Cryptoassets are defined by the Financial Conduct Authority (“FCA”) as “cryptographically secured digital representations of value or contractual rights that use technology and can be transferred, stored or traded electronically”. Cryptocurrencies (such as Bitcoin) are an example of a particularly widely used cryptoasset taking the form of a digital currency and it uses encryption techniques and methods such as “blockchain” to control how many units of currency are available and verify fund transfer between users. This decentralised structure permits cryptocurrencies to exist without the control of a central bank. The sharp rise of cryptoassets prevalence (there are now over 1500 versions of cryptocurrency available) has created an interconnectedness with the traditional financial system. Industry bodies have expressed their concern in relation to the risk of the spread of market disturbances by the growing use of cryptocurrencies in a newly published report by the Financial Stability Board (“FSB”) in February 2022. In such report, it was signalised that the cryptoassets market might represent a real threat to global financial stability…
The findings of the Finance Ministry show that although around 2.3 million people in Britain own a cryptoasset the understanding of the sector has been declining. This creates a problematic situation whereby the majority of users do not fully understand what they are buying, and take greater risks than they might expect to. Significant losses can be avoided if cryptoasset users are aware of the risks and potential losses related to their use. Therefore, we can expect ASA and CAP activity to continue at pace with robust investigations in the event of non-compliance. The FSB is actively working alongside other standard-setting bodies to address the associated threats and confirmed that throughout 2022, information will be shared on regulatory and supervisory approaches in a bid to achieve secure and effective oversight arrangements.
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 Skrill Ltd, 15 December 2021/ Luno Money Ltd t/a Luno, 15 December 2021/ Exmo Exchange Ltd, 15 December 2021/ CoinBurp Ltd, 15 December 2021/ Coinbase Europe Ltd t/a Coinbase, 15 December 2021/ eToro (UK) Ltd, 15 December 2021