The chair of the United Kingdom's Financial Conduct Authority has warned that overextending the reach of regulators could backfire in the case of some cryptocurrency tokens.
Regulators must step up protections for consumers who invest in crypto tokens but also keep in mind that overreach could backfire, the chair of the United Kingdom’s Financial Conduct Authority (FCA) has cautioned.In a new speech written for the Cambridge International Symposium on Economic Crime, Charles Randell, Chair of the FCA and Payments Systems Regulator, said that there is currently a real problem with consumers who delve into the crypto sphere without due awareness of the risks. He singled out the role of influencers and paid-for advertising in particular, noting that Kim Kardashian’s recent Instagram promotion of Ethereum Max, a brand-new token issued by “unknown developers,” “may have been the financial promotion with the single biggest audience reach in history.” While Randell reserved judgement on whether or not Ethereum Max is itself fraudulent, the vast reach of such a campaign and its potential to mislead under-informed consumers should give regulators pause, he implied. Add to this dynamics such as retail investor hype, FOMO, and the proliferation of pump and dump crypto-related scams, Randell claimed that many consumers remain blind to the financial risks they are courting by trusting influencer endorsements and savvy online token campaigns. To illustrate his point, Randell underlined that around 2.3 million UK citizens currently hold crypto, 14% of whom have “worryingly” used credit to purchase it.