Digital currencies have risen to compete with traditional types of currencies as being more efficient, and convenient. The demand could be as a result of less influence and regulation by financial institutions thus making the transfer of transactions fast, almost instant.
The decentralised peer-to-peer type of transaction makes it even more meaningful from the viewpoint of global acceptance.
However, there have been concerns to call for and recommend more precise and relevant regulations to control digital payments. Even though there has been little support in control of cryptocurrency markets, the pricing and volatility of Bitcoin have attracted greater interest and speculation. Being the major cryptocurrency used for online payments, financial conduct authority (FCA) has been cautious about the vulnerability of these emerging currencies.
The beginning of April 2018 witnessed a newer dimension to financial activities using cryptocurrencies. The official statement released by FCA stated that companies that engage in services related to cryptocurrencies, as well as other products falling under its derivative, will have to comply with FCA rules and European Union (EU) regulations. Bitcoin not being part of regulated products has been identified to pose a greater risk to the stability of other financial systems.
Moreover, the EU has provided a coherent output on supervision and oversight related to financial activities. The evolved use of Bitcoin across the globe has been taken to lower levels that somebody could buy bitcoins using their iTunes Gift Card. This means the digital currency is taking over traditional types of payment across all sectors.
To protect traditional currencies and bring stability to all financial activities, it has become compulsory for merchant providers of cryptocurrency services to seek authorisation from FCA.
These activities include arranging transactions, acquiring cryptocurrencies from ICOs, or providing services and advice related to digital currencies, such as cryptocurrency options, contracts and differences (CFDs), and cryptocurrency futures.
Fortunately, whatever cryptocurrency that falls under the regulation is open to evaluation. While Initial Coin Offerings may fall under regulated products, not all of them will require authorisation. Therefore, depending on how each cryptocurrency or token was acquired, forms the basis of its authorisation and/or regulation.
For this reason, it has necessitated that merchants seek advice from professional experts to discern if they should seek authorisation from FCA or not. This will, however, have an impact on how blockchain technology will transform financial transactions in the near future. This creates more risk and speculation on the success of investments on cryptocurrencies. Investors will have to conduct research on the firms they should invest in and which one they should not.
Here’s the whole deal, it is now every firm’s responsibility to acquire authorisation and permission from the regulatory authority for their activities. Also, this regulation is compulsory.
Any company that evades or doesn’t seek this authorisation is engaging in criminal activity and is subject to enforcement. It is thus important to be certain on who you deal with for your cryptocurrency activity.