The real crypto risk is not just to consumers.
While the £53m saved by retail consumers from the recent Financial Conduct Authority ban on crypto-derivatives is sure to draw headlines, the true potential of cryptocurrencies never lay with consumers in the first place.
Beyond the eye-watering price of Bitcoin or the amusing trading of DogeCoin, central banks are reviewing the potential of stablecoins to upend the regulatory system.
Indeed, considering only a few months ago the FCA launched a consultation proposing that cryptoasset promotion should be regulated, the watchdog’s weathervane is clearly set and the wind is blowing firmly in one direction.
From the threat that Libra may attract and hold so much capital as to equal the central banks, to the potential that internal stablecoins could make central reserves obsolete – expect the big cryptocurrency waves to come from the large financial institutions, rather than legions of retail investors.
Claude Brown
Reed Smith
Understanding the problem
Regarding your article ‘Is the FCA shifting its position on fees?’ (Oct 2).
Reading the annual report from the Financial Services Compensation Scheme, I was able to glean very little information on the type of companies who are the “polluters” before I fell asleep.
I read that 137 financial services companies failed last year, and the FSCS helped more than 250,000 customers recover money. London Capital & Finance has been one of the most significant cases with more than 7,000 complaints – but this raises questions around how it could issue and market bonds without being authorised by the FCA.
There were also six credit unions that failed, leading to a further £5m loss, and of course Sipp providers who invested clients into their own high-risk investments or worse still, their personal holiday fund.
The majority of IFAs use platforms and mainstream providers to invest client’s money, rather than trying to invest the funds themselves.
Generally, if the IFA fails, the client would not lose money.
There are two types of people giving advice: those that have their client’s best interests at heart, and the polluters who try and make as much money as possible.
These firms rarely operate by investing client’s money into mainstream funds, so perhaps that is the issue?
For IFAs to be able to make suggestions, we need to better understand which firms were responsible for these losses and how the loss came about.
Jason Ball
Integrated Investments
