FCA: Crypto Products Less Regulated in UK Than in US

crypto regulation

Last week was an expensive one for BlockFi.

The New Jersey-based cryptocurrency lender was fined $100 million by the U.S. Securities and Exchange Commission (SEC) to settle a probe into selling unregistered securities.

See more: BlockFi To Pay $100M to SEC to Settle Case

The penalty was among the highest against a crypto company as U.S. regulators investigate these firms, as they collect billions on promises of yields far above those available through traditional savings accounts.

“Today’s settlement makes clear that crypto markets must comply with time-tested securities laws,” SEC Chairman Gary Gensler said in a statement.

But that sense of urgency has yet to reach the Financial Conduct Authority (FCA), the United Kingdom’s regulatory agency. While the FCA plays a role when it comes to registering crypto asset exchanges for anti-money laundering purposes, it lacks authority to protect consumer’s digital assets.

“Crypto assets are unregulated and high-risk, which means people are very unlikely to have any protection if things go wrong,” an FCA spokesperson told City A.M.

The news outlet cited BVNK, a Cape Town, South Africa-based digital asset banking platform that offers accounts in the U.K.

Launched last fall, the company’s interest-bearing accounts generate returns for offering collateralized loans to traders seeking leveraged positions. So far, 25% of the company’s 100 customers have registered.

Chris Harmse, managing director for BVNK, told the news outlet that it’s a risky business.

“The beauty of the crypto market is a lot of those lending positions are over collateralized,” he said. “For every $1 they lend, they place $1.50 of bitcoin as collateral against those positions.”

He added that his company’s yield accounts have annual returns of 4% to 8%.

Criticism of crypto lending accounts display a fundamental lack of understanding of the processes and assets at play, he added.

As for the possibility of regulation in the U.K., Harmse said “We’ll take it as it comes.”