Speaker 1: I'm Stacy Marie Ishmael, Managing editor of Crypto for Bloomberg News.
Speaker 1: And this is Bloomberg Crypto, a daily Bloomberg I Heart podcast.
Speaker 1: It's Wednesday June. Richie Sunak is one of the most
Speaker 1: senior people in the UK government. This year he announced
Speaker 1: that he wanted to establish the country as a global
Speaker 1: hub for crypto. But he's got some catching up to do.
Speaker 1: The competition between different countries who are trying to attract
Speaker 1: crypto talent is only getting more intense. But this environment
Speaker 1: in which politicians seem to be willing to make major
Speaker 1: concessions to the crypto industry gives rise to an important question.
Speaker 1: Who's standing up for consumer protections? Nikkil Ratti, who who
Speaker 1: runs the SCA, He doesn't have very much time for
Speaker 1: crypto and he says repeatedly that anyone who invests in
Speaker 1: crypto must exp to lose all their money. That's Bloomberg
Speaker 1: reporter Will Shore. He joins me now to share more
Speaker 1: about the regulatory landscape for consumer protection in the UK. Well,
Speaker 1: thank you so much for joining us. Thank you. You
Speaker 1: have been reporting on the UK and UK financial services
Speaker 1: for a fair amount of time and more recently you
Speaker 1: have joined the shall we see slightly more chaotic crypto beats? Yeah,
Speaker 1: but that's right. Yeah, it's um. I've gone from covering
Speaker 1: Libel transition, which is all very dry regulation, to suddenly
Speaker 1: as a wild West world of crypto assets. Certainly a
Speaker 1: popular phrase around here, wild West. So one of the
Speaker 1: areas of concern in that more chaotic environment is the
Speaker 1: idea of consumer protections and I'd love for you to
Speaker 1: share with our listeners a little bit more of your
Speaker 1: reporting on what that looks like or perhaps doesn't look like.
Speaker 1: In the UK. Yeah. I think the way to understand
Speaker 1: this first of all is that a lot of this
Speaker 1: is coming from the UK Financial Conducts Authority, which is
Speaker 1: the main city regulator. You mean the City of London exactly,
Speaker 1: the City of London. Yeah, and so sort of understand
Speaker 1: understand the f c A, but you have to understand
Speaker 1: nikkil Ratti, who who runs the f c A. He
Speaker 1: he doesn't have very much time for crypto He grew
Speaker 1: up in a former ship building town in the northwest
Speaker 1: of England, um called Barrow in Finesse, where his his
Speaker 1: dad was a local doctor and a magistrate. He grew
Speaker 1: up watching trials at the local magistrate's court and was
Speaker 1: influenced by his dad's work with people that come from
Speaker 1: poorer backgrounds, and he's not very receptive to anything that
Speaker 1: might be deemed a scam directed at the vulnerable or
Speaker 1: get rich scheme. We've seen an explosion among younger people
Speaker 1: speculating on cryptocurrencies or other high risk investments. There was
Speaker 1: evidence too that, as with the game Stock episode, more
Speaker 1: people see investment as entertainment, behaving less rationally and more emotionally,
Speaker 1: egged on by anonymous and unaccountable social media influences. That's
Speaker 1: why we are creating an eleven million pound digital marketing
Speaker 1: campaign to warn them of the risks. As we have
Speaker 1: repeatedly made clear, investors in crypto assets should be prepared
Speaker 1: to lose all their money. And that's a pretty big
Speaker 1: contrast to other folks in you know, sort of high
Speaker 1: positions of UK authority in government and regulation, you know,
Speaker 1: some of whom have been extremely enthusiastic about the possibilities
Speaker 1: for crypto and saying things like they want the UK
Speaker 1: to become a global hub for this asset class. That
Speaker 1: kind of messaging is coming primarily from the Treasury. This
Speaker 1: idea as Britain as a global hub for crypto tech.
Speaker 1: It's something quite new. It's messaging that's quite new. I
Speaker 1: don't think they're necessarily like really detailed thought through ideas
Speaker 1: behind that position yet, And that's why I partly why
Speaker 1: it's the f c A which is still setting the tone.
Speaker 1: But Britain obviously has like recently come out of the
Speaker 1: European Union and it's got this opportunity to remake its regulations,
Speaker 1: like away from the framework from Brussels, and I think
Speaker 1: among optimists there's a bit of a hope that this
Speaker 1: might mean the kind of regulatory reforms that might help
Speaker 1: blockchain projects to to take route a bit in Britain.
Speaker 1: I think it's still quite early stages. What are some
Speaker 1: of the examples of the kinds of consumer protections that
Speaker 1: the SEA has either put into police or is considering.
Speaker 1: Over the past two years, the f c A has
Speaker 1: effectively banned Binance, the world's biggest crypto exchange by trading
Speaker 1: volume from the UK. It's denied permission for so called
Speaker 1: crypto a t m s, and it's made its standards
Speaker 1: for doing business so stringent that most digital currency companies
Speaker 1: that want to operate here are not able to do.
Speaker 1: So it's all been to quite interestingly through anti money
Speaker 1: laundering rules which which weren't crafted obviously with the crypto
Speaker 1: industry and mind. So everything is being seen through that
Speaker 1: prism in the absence of more established set of rules
Speaker 1: that have been set up to deal specifically with crypto.
Speaker 1: In the absence of those rules, as you say, you're
Speaker 1: getting this kind of harder line, as it were, from
Speaker 1: the FDA. Do you think there's a world in which
Speaker 1: if the Treasury does start to firm up a set
Speaker 1: of recommendations or even you know, policy or legislation, there
Speaker 1: may be like a meeting in the middle of these
Speaker 1: two approaches. I think that's probably right. The chief executive
Speaker 1: officer for Golden SAX International was speaking at a conference
Speaker 1: in London in April. He said that UK regulators could
Speaker 1: end up becoming world leaders in crafting rules for crypto,
Speaker 1: provided that Britain moves fast. And there is certainly in
Speaker 1: interest among big banks in what blockchain technology might mean
Speaker 1: for the bond trade, for example, and whether it can
Speaker 1: be incorporated into the settlements in the bond trade. And
Speaker 1: I think probably that's what the Treasury is is getting
Speaker 1: at when it talks about Britain being a global hub
Speaker 1: for crypto technology rather than rather than crypto assets. At
Speaker 1: the moment, that's all in its very early stages. You
Speaker 1: know what we've really got here. The narrative at the
Speaker 1: moment really is about protecting ordinary consumers from risky products
Speaker 1: that can swing very dramatically in price. To your point
Speaker 1: about that very nuanced distinction between the idea of a
Speaker 1: crypto asset, which might be something like a coin or
Speaker 1: a token or an n f T, and crypto technology,
Speaker 1: which is largely in kind of the context of the
Speaker 1: blockchain that you described, could have potentially interesting financial services regulations.
Speaker 1: Most consumers are most likely to encounter like bitcoin in
Speaker 1: the wild rather than an internal blockchain project at a
Speaker 1: major investment bank. Yeah, that's exactly right, isn't it. I mean,
Speaker 1: the Treasury is talking effectively about a crypto industry that
Speaker 1: doesn't really exist yet. It's talking about a kind of
Speaker 1: utopian situation where Britain is a world leader on a
Speaker 1: technology that hasn't really taken route yet in the way
Speaker 1: that the Treasury envitages um. Whereas like what the f
Speaker 1: c A is dealing with is the crypto industry as
Speaker 1: it stands, Thank you will, We'll be right back. I
Speaker 1: think that's such an important distinction, and one that seems
Speaker 1: to be very similar to the discussions that are happening
Speaker 1: here in the US with the SEC and the CFTC,
Speaker 1: the two biggest regulators that are attempting to kind of
Speaker 1: divvy up the world of crypto regulation between them. And
Speaker 1: then of course there are developments happening in the EU
Speaker 1: as well. Can you talk a little bit more about
Speaker 1: what those look like compared with what you're seeing in
Speaker 1: the UK. One of the things that people say about
Speaker 1: the US versus the UK when it comes to regulating
Speaker 1: crypto is that at least in Britain, we know who
Speaker 1: is regulating crypto point, which is the Financial Conducts Authority,
Speaker 1: which effectively sympathizes the issue for people a lot, Whereas
Speaker 1: I think in America there are kind of wide questions
Speaker 1: about exactly which regulator is doing what when it comes
Speaker 1: to digital assets. In terms of the European Union, so obviously,
Speaker 1: like Britain's not in the European Union anymore, each individual
Speaker 1: country is dealing with the crypto industry based on its
Speaker 1: own national laws again, you know, which haven't really been
Speaker 1: devised with with crypto in mind. European regulators want to
Speaker 1: see like a big pan European legislative framework put in
Speaker 1: place in order in order to deal with this and
Speaker 1: to standardize everything. There's no indication that that's going to
Speaker 1: happen anytime soon. So to someding agree, I think crypto
Speaker 1: firms are trying to work out which particular part of
Speaker 1: the European Union might be more receptive to their approaches.
Speaker 1: So if you look at Binance, for example, they got
Speaker 1: regulatory approval from the French government and the Italians and
Speaker 1: the Italians, and as I understand they're they're seeking it
Speaker 1: in Germany as well. Um they've they've been over in Britain.
Speaker 1: They're making similar overtures um in in the UK. So
Speaker 1: they ran pang. So the CEO was in town in
Speaker 1: early March for a dinner with people from the industry,
Speaker 1: people from government, a couple of a couple of politicians.
Speaker 1: By all accounts, um he it was something of a
Speaker 1: diplomatic offensive with them, you know, just trying to like
Speaker 1: warm people up, but build confidence, build confidence in the
Speaker 1: idea of finance. At the moment, I mean, I think
Speaker 1: there's there is a big contrast between approach that France
Speaker 1: has taken and they approached the approach that you that
Speaker 1: the UK has taken when it comes to finance and
Speaker 1: the UK, you know, the UK is just taking seemed
Speaker 1: to be taking a harder line. One of the interesting
Speaker 1: things about what you mentioned in terms of the EU
Speaker 1: as it will do, it's the European Union trying to
Speaker 1: get a big sweepye agreement that wraps in these twenty
Speaker 1: seven member states, is that is from a lot of
Speaker 1: folks in the crypto industry's perspective, like what they need right,
Speaker 1: what they need is consistency. It's much harder, they say,
Speaker 1: for them to on a country by country or even
Speaker 1: in the US, on a state by state basis, be
Speaker 1: dealing with slightly different regulations depending on where they want
Speaker 1: to operate. Do you have a perspective on, you know,
Speaker 1: whether from folks in the industry or folks in the
Speaker 1: UK government or regulators, where where the UK is actually
Speaker 1: like trying to move closer to something that resembles an
Speaker 1: aligned global regulatory framework or that is still very much
Speaker 1: each country to itself. Crypto firms are alive to that
Speaker 1: kind of rhetoric, which is coming out. But at the
Speaker 1: same time, I think they know that one of the
Speaker 1: things that's holding back the crypto industry is is a
Speaker 1: lack of like comprehensive standardized regulation that enables everyone to
Speaker 1: deal with each other on equal terms. And I think
Speaker 1: there is a sense that, you know, by standardizing the rules,
Speaker 1: like not just in the European Union but sort of
Speaker 1: around the world, that that might be what it takes
Speaker 1: to to bring crypto in and to know, add a
Speaker 1: bit more respectability to it, bring it more, and bring
Speaker 1: it more into the mainstream. Thank you, Will, that was
Speaker 1: so interesting. You can find more of Will's reporting on
Speaker 1: the Bloomberg terminal on Bloomberg dot com or following him
Speaker 1: on Twitter. He's at William Shaw five four six. It
Speaker 1: might feel like there's always some kind of election happening
Speaker 1: in the US, and that's because there is, Stephen. Local
Speaker 1: actions can happen every year, while congressional midterms occur every
Speaker 1: other year, allowing US voters to decide who will represent them.
Speaker 1: These elections really matter, and crypto executives are spending significant
Speaker 1: amounts of money to influence them. In two for the
Speaker 1: very first time, political spending by major figures in the
Speaker 1: crypto industry eclipse the dollars being spent on influencing elections
Speaker 1: by more traditional donors like folks who work in big
Speaker 1: tech or pharmaceuticals. On the next episode of Bloomberg Crypto,
Speaker 1: report to Alison ver sprole joins me to share her
Speaker 1: reporting on why crypto is emerging as a significant financial
Speaker 1: force in US politics. I'm Stacy Marie Ishmael, and this
Speaker 1: is Bloomberg Crypto, a daily podcast from Bloomberg and I
Speaker 1: Heart Radio. For more shows from I Heart Radio, visit
Speaker 1: the I Heart Radio app, Apple Podcasts, or wherever you
Speaker 1: get your podcasts. Email your questions, comments, or suggestions for
Speaker 1: the show to Crypto at Bloomberg dot net and you'll
Speaker 1: find us on Twitter at Crypto. The supervising producer of
Speaker 1: this episode is Vicky very Galina. Our producer is Mohammed Farouk,
Speaker 1: Associate producer is Zan Absudiki. Associate producer is Thy Butler.
Speaker 1: Associate producer is Moses on Desta wonder At is our engineer.
Speaker 1: Bloomberg's head of Podcasts is Francesca Levi.