Home Regulations Financial Regulator In UK Advises Banks on the proper way of Managing Risks of ‘Crypto Assets’

Financial Regulator In UK Advises Banks on the proper way of Managing Risks of ‘Crypto Assets’


The Financial Conduct Activity or FCA of United Kingdom has issued a policy for banking institutions about the effective way of handling the risks associated to crypto assets. This is according to the press release posted on FCA website days ago.

According to the report issued by Megan Butler and Jonathan Davidson Executive Directors of Supervision, banks should use an individual approach to customers dealing with digital currency since the threat related to diverse business relationships can vary.

According to them, following a risk-based method doesn’t mean banks must approach clients working in these activities in the same way. Rather, they look forward to banks to know that the risk related to diverse business relationships in one broad type can vary, and to handle those threats in a right way.

As a result, the regulatory body has recommended many good practice measures to be performed by banks to keep away from threats of customers using digital currencies for criminal purposes. The Financial Conduct Activity encouraged banking institutions to increase the awareness of their employees to digital assets to help them know its threats and to engage with clients dealing with cryptocurrencies to know the nature of their business among others.

In the report, UK financial regulator also stressed the non-criminal purposes for utilizing digital assets. This include supporting innovative technological development, and speculative investments that are risky.

But, considering the anonymity and popularity of cryptocurrency, the UK’s Financial Conduct Activity suggested a number of “high-risk” signs. These include customers utilizing state-issued digital currencies and having large amounts of ICO or initial coin offering tokens.

The Financial Conduct Activity clarified that the threat of utilizing a crypto that is state-sponsored is that it is intended to evade international financial sanctions. Thinking about the threats related to Initial Coin Offerings, the financial regulated reported that this type of doings involved a “heightened threat of falling victim to asset scam.”

December last year, when Bitcoin has a huge value, the Financial Conduct Activity warned traders and investors regarding the possibility of losing their funds, claiming that BTC is an odd commodity, referring to its scarcity.

A month ago, Kenya’s Central Bank issued the same warning to country’s banking institution, giving them an advice against offering services to dealers of cryptocurrencies.

According to Patrick Njoroge CBK Governor, “There are threats related to cryptocurrency mainly on consumer security, fraud, hacking as well as loss of information and they are susceptible to be utilized as a pyramid scheme.”



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Sydney Ifergan

Sydney has 20+ years commercial experience and has spent the last 10 years working in the online marketing arena and was the CMO for a large FX brokerage.

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