The United Kingdom’s (UK’s) Payment System Regulator (PSR), an independent regulatory body formed in 2015 to oversee payments within the region, has sights firmly fixed on regulating the cryptocurrency industry. According to PSR's personnel Nick Davey, the regulator has begun its research into the emerging niche by studying the functionalities of the distributed ledger technology (DLT), which underpins most cryptocurrencies.
Such research is especially vital since the PSR will oversee the public use of payment-focused cryptocurrencies under the new Financial Services and Markets Bill currently being reviewed by Parliament. If the bill is approved, the PSR must create additional safeguards to protect consumers paying with cryptocurrency.
Commenting on the nearly inevitable adoption of digital currencies for payments, Nick Davey underlined the importance of responsible innovation. He reportedly said, “While we don’t expect to see digital currencies replacing traditional currencies in the immediate future, it’s important that innovation and competition in payments are balanced with strong safeguards to [ensure] people are protected when paying for things.”
Under its current role of regulating the crypto-focused payment system, the U.K Treasury has assigned PSR to supervise blockchain startup, Fnality. Fnality utilizes a DLT system to enable major institutions to transact with central bank money, a form of pseudo-central bank digital currency. The PSR is tasked with studying Fnality’s system to understand how it should approach crypto regulation and set up safeguards against fraud.
UK Regulators Step up Crypto Oversight
In addition to studying crypto’s underlying technology, Nick Davey mentioned that the PSR is investigating the recent collapse of the FTX exchange. The goal is to “assess what wider implications there are on the crypto sector” and how to apply the lessons to the UK market.
The flurry of recent efforts by UK regulators to oversee the crypto industry is not surprising. Aside from the global decline in the price of crypto assets, research reveals that crypto fraud jumped over 34% in the past year. Consumers require additional protection to invest in and generate returns from the nascent crypto market.
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