Andrew Bailey, the Chief Executive of the UK Financial Conduct Authority (FCA), recently gave an interview to the BBC in connection with bitcoin. In remarks on 14 December, Mr Bailey said that he currently sees no systemic risk in bitcoin and is not pushing the UK government to make the cryptocurrency part of the FCA’s regulatory remit. He emphasised that investors should be prepared to lose everything if they buy bitcoin, however as long as people understood the risks of what he termed “a very volatile commodity”, he would not press the UK government to legislate that the FCA regulate it. He said “I don’t think bitcoin is prevalent enough at the moment to be a systemic threat in the way we experienced during the financial crisis other threats; it needs watching carefully but I don’t think we’re there yet… If I thought there was evidence of people saying: ‘You know what I’m going to put my pension into? bitcoin!’ I’d be very concerned, but we don’t see that at the moment.”.
Mr Bailey rejected bitcoin’s description as a currency, stressing it is a commodity — which the FCA does not regulate. The FCA does, however, oversee instruments underpinned by bitcoin, and has already issued a warning about contracts for difference that are underpinned by the cryptocurrency. He also conceded during the interview that retail customers could be confused by its label as such. He said “By adopting the name of cryptocurrency there is a risk that some people regard it as the same as what an economist would call a fiat currency,” he said. “A fiat currency is backed by the state and that’s what preserves the value of the currency through the actions that central banks take. Bitcoin is not that – it’s not a currency.”