April 9, 2018 / 7:48 AM / 7 months ago

UK watchdog reviews cryptocurrencies, Brexit stretches resources

LONDON (Reuters) - Britain’s markets watchdog will publish a review of cryptocurrencies in the third quarter as it grapples with stretched resources due to Brexit.

The Canary Wharf financial district is seen in east London November 12, 2014. REUTERS/Suzanne Plunkett

Cryptocurrencies such as bitcoin have seen sharp swings in value, triggering concern among regulators.

The Financial Conduct Authority (FCA) said in its business plan for the coming financial year that cryptocurrencies themselves don’t come under its regulatory remit, but the use of them does.

“We will work with the Bank of England and the Treasury as part of a taskforce to develop thinking and publish a discussion paper later this year outlining our policy thinking on cryptocurrencies,” the FCA said in the plan published on Monday.

Regulators and central bankers across the world have warned retail investors about the pitfalls of investing in cryptocurrencies, saying they could lose all their money.

On Friday, the FCA said firms offering services linked to cryptocurrency derivatives must meet all relevant rules in the regulator’s handbook or could face sanctions.

The business plan set out several areas the watchdog will study in coming months, though it cautioned resources would be stretched by having to deal with the implications on the financial sector of Britain’s withdrawal from the European Union next year.

The FCA expects to spend 30 million pounds ($42 million) on dealing with Brexit, which comes on top of its planned budget of 518.2 million pounds.

“We recognize that this year we need to dedicate a significant amount of resource to withdrawal from the EU,” FCA Chief Executive Andrew Bailey said.

“As a result, setting our priorities this year has involved a particularly rigorous level of scrutiny and challenge to focus on areas where we see the greatest potential for harm.”

The FCA said there was still considerable uncertainty about the scale and timing of various activities linked to Brexit.

“We will closely monitor the progress of negotiations and the potential for any further impact on our cost base,” the FCA said.

Reporting by Huw Jones; Editing by Mark Potter

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