Her Majesty’s Treasury wants to bring the promotion of crypto-assets into the remit of the Financial Conduct Authority (FCA), and implies that crypto investors do not understand the technology nor the risks involved.
It must surely be a given that many crypto investors certainly do not understand a lot of the complexities of certain tokens in the cryptocurrency sector. Even for the most intelligent of analysts, it can take quite some time to understand the myriad technologies coming out of this space with any depth.
However, what a lot of these investors do know is that remaining within the fiat currency system is a disaster waiting to happen. Extremely high inflation is eroding their purchasing power quicker than at any other time in most of their living memories.
For those with even the slightest inkling of what is going on in the monetary system, it must be patently obvious that action needs to be taken quickly in order to protect against the frittering away of wealth through no fault of their own.
Turning to cryptocurrencies is possibly a risky venture, given that approaching regulations may well seek to subdue the rising sector and bring it under the control of government. Rishi Sunak, the UK chancellor of the exchequer has said:
“We are ensuring consumers are protected, while also supporting innovation of the crypto-asset market,”
If this means that those very same consumers will be locked out of the crypto markets while the banks and those wealthy enough to be considered “accredited investors” get free hand, then we will be facing the same situation as is currently the case in traditional finance.
We live in a world where as long as you are 18 years of age, regardless of your intelligence, you can enter a casino and lose every cent you own. However, shock and horror if anyone decides to put their own money into a crypto investment.
Bitcoin has gone up steadily over more than a decade, providing incredible value to those who invested, as long as they were happy with the volatility of such a young asset.
The same should be true of some of the incredibly innovative products coming out of the crypto industry. The return on many defi platforms beat what any bank can offer by the most ridiculous amount. Prohibiting investors from accessing such a return under the guise of “protecting” them from fraud and scams is frankly intolerable.
It is one thing to protect investors from the nefarious acts of companies that are operating fraudulently, it is quite another to attempt to lock them out of putting their money where they can get the best rate of return.
No, many investors will not know what they are investing into with cryptocurrencies, however, banning their promotion is another step on the road to a big brother state.
Education is what is needed, and if the risks and benefits can be clearly laid out, then why on earth couldn’t an investor choose to take a calculated risk and put their money where they want?