Speaking at the FCA Annual Public Meeting today, Financial Conduct Authority Chief Executive Andrew Bailey delivered a wide-ranging speech on the state of the FCA. Within prepared remarks, Bailey briefly mentioned innovation in financial services, and specifically cryptoassets. Bundling up “operational resilience” and the consequences of its loss, Bailey said this was currently taking on two forms. The first being cyber-risk and the second being Fintech change. Bailey stated;
“The second area is the impact of technological change and innovation. As I said earlier, the FCA is firmly a supporter of innovation, but we must balance this against the threats that come from some forms of innovation and the new issues they can pose. A good example of this is cryptoassets. We are keen to see the potential of their underlying technology, and do not rule out roles for cryptoassets themselves. But the risks are evident too: not least in the question of whether the consumers who use them understand the asset and price volatility they involve. We are working closely with the Treasury and Bank of England to assess these issues and come up with appropriate responses.”
The once robust initial coin offering market has taken a mighty turn as the sector has quickly cooled. Rampant speculation, and questionable offerings, have undermined this sector of Fintech innovation. While many industry followers and policymakers believe in the potential of blockchain technology, ICOs may be slipping from the radar. The UK has been slow to enact bespoke regulation for the crypto sector thus allowing it to grow and evolve. But Bailey’s comment regarding ongoing collaboration with HM Treasury and the Bank may be indicative of future rules.