New UK rules for crypto exchanges

[Urbandreamer]

I really don't know what to think about this.

On the one hand it's arguably a good idea. On the other, it's too demanding.

The FCA has issued some requirements for all companies that trade crypto which means that I had to answer some questions and take a test in order to continue to use my exchange.

I identified myself as a "restricted investor", or someone who was not high net worth and wished to limit the amount of money I put into high risk investments.

The test however ideally required research that I really didn't want to do. I'm not going to use wrapped tokens, so why do I have to prove that I understand possible downsides. I have little intention of buying meme coins, so why do I need to show that I understand them?
Possibly high street banks should be required to quiz customers about loan sharks, off shore accounts and money laundering rules.

Anyway, I thought it worth drawing attention to these new crypto rules.

https://cryptopotato.com/these-crypto-e ... ine-nears/

[murraypaul]

The test however ideally required research that I really didn't want to do. I'm not going to use wrapped tokens, so why do I have to prove that I understand possible downsides. I have little intention of buying meme coins, so why do I need to show that I understand them?

Because the same companies that offer simple exchange trading also do all of those things.

All the bank knows is that you have sent money to an (unregistered, unaudited) exchange, not what you are going to do with it afterwards.

[Urbandreamer]

The test however ideally required research that I really didn't want to do. I'm not going to use wrapped tokens, so why do I have to prove that I understand possible downsides. I have little intention of buying meme coins, so why do I need to show that I understand them?

Because the same companies that offer simple exchange trading also do all of those things.

All the bank knows is that you have sent money to an (unregistered, unaudited) exchange, not what you are going to do with it afterwards.

Yes I got the bit about exchanges offering meme coins. What I didn't get was why such requirements don't exist for banks.

I could go on, but to be fair similar questions are asked by stock brokers, but only if you invest in things like Investment Trusts. (Have you read the KID?)
The don't ask those questions just because you can, but chose not to.

I am actually old enough to remember when UK banks and building societies sold "Structured products". Something that arguably you should not get involved without significant research and you can now only become involved with through a FA in this country.
https://assets.publishing.service.gov.u ... e_bill.pdf

As I said, I'm in two minds on the subject. On the one hand I see nothing wrong with requiring that people do a bit of due diligence, on the other I find it unfortunate that crypto is singled out for more onerous treatment. It's not exactly equitable is it?

[murraypaul]

Because the same companies that offer simple exchange trading also do all of those things.

All the bank knows is that you have sent money to an (unregistered, unaudited) exchange, not what you are going to do with it afterwards.

Yes I got the bit about exchanges offering meme coins. What I didn't get was why such requirements don't exist for banks.

If you tried to apply for a product considered high risk, they would be.
Banks are regulated, and trusted to perform that screening task.

I could go on, but to be fair similar questions are asked by stock brokers, but only if you invest in things like Investment Trusts.

Brokers are regulated, and trusted to perform that screening task.

As I said, I'm in two minds on the subject. On the one hand I see nothing wrong with requiring that people do a bit of due diligence, on the other I find it unfortunate that crypto is singled out for more onerous treatment. It's not exactly equitable is it?

If there was a regulated, trusted, crypto exchange, they could perform the checks.
But there isn't, so the checks are done on the boundary instead.
There is no regulated, trusted, company who knows what you are or are not trying to buy.

[Urbandreamer]

Yes I got the bit about exchanges offering meme coins. What I didn't get was why such requirements don't exist for banks.

If you tried to apply for a product considered high risk, they would be.
Banks are regulated, and trusted to perform that screening task.

And yet you argued that I needed to understand a product that I wasn't applying for in the case of a crypto exchange, because I could?

I notice that you ignored banks history with structured products. Something that they actually PUSHED!
Do you also ignore their history with PPI?

I'm not really that upset about the crypto exchange requirements. I'm simply pointing out the default position that banks are safe and act in your best interest, as opposed to crypto exchanges.

Ps, my exchange made it quite easy to pass their test. All you had to to was read their pages of information about what they traded and the risks involved. Something that is sensible with ANY investment.

[murraypaul]

I'm simply pointing out the default position that banks are safe and act in your best interest, as opposed to crypto exchanges.

Yes. That position is correct.

Banks are safe. They are regulated, and your money is protected in case of failure.

Crypto exchanges are not safe. I think the events of the past year are more than enough to show that.

Almost all of them have failed, in ways that showed they had absolutely no interest in protecting customer funds.

Banks may try to sell you products with inflated commissions. Come back to me when they start using customer funds to pump the value of assets owned by their management, and then buy them back, simply transferring customer funds to executives. And the staff knew that at the time, and were saying so internally.

So far, crypto exchanges have been shown to be run by people who are, at the most complementary, completely incompetent at their jobs, and, more realistically, criminal.

Leaving crypto itself, as a technology or concept, to one side, the crypto industry is a cesspit of criminally incompetent charlatans, whose only necessary skill is the ability to lie to people to take their money.

[Urbandreamer]

I'm simply pointing out the default position that banks are safe and act in your best interest, as opposed to crypto exchanges.

Yes. That position is correct.

Banks are safe. They are regulated, and your money is protected in case of failure.

Crypto exchanges are not safe. I think the events of the past year are more than enough to show that.

Almost all of them have failed, in ways that showed they had absolutely no interest in protecting customer funds.

I think that a case could be made that most banks have failed. Or at least historically there are a significant number that no longer exist.
You seem to be comparing institutions that can not have existed for more than a decade, with hundreds of years of history* and claiming that things that could not possibly be true. There are less crypto exchanges to fail than banks, are you really going to make the claim that the numbers of institutions don't have a baring?

I did a quick search and found crypto exchanges confused with hedge funds and crypto lending institutions. Can we honestly compare exchanges with banks in the way that you seem to want to?

Last Year?

We had one exchange fail in 2023. NO not FTX, that was the year before.
Meanwhile five banks failed in the US last year.
https://www.fdic.gov/bank/historical/bank/bfb2023.html

Events of the past year don't seem to agree with your memory of them. Indeed common sense would argue that we should see more bank failures than you expect.

However you have twisted the argument again. The test of your understanding of meme coins has little to do with institutional security. Is it not enough for the FCA that you recognize the fact that they regard crypto as high risk and that you know there is no guarantee that your funds will be safe on the exchange?

*If people are interested, rather than trying to make a point, then it might be an idea to research the era of "free banking" in Scotland and the USA. Arguably it has a lot in common with crypto exchanges.
https://en.wikipedia.org/wiki/Free_banking

[murraypaul]

You have completely ignored the second half of the sentence:

Banks are safe. They are regulated, and your money is protected in case of failure.

I once had money in a bank that failed. I still have the money.

That isn't true of anyone who had money in a failed crypto exchange. Almost all of which have failed in the last few years.

Transferring money from a bank account to an unregulated crypto exchange is risky.

[Urbandreamer]

You have completely ignored the second half of the sentence:

Banks are safe. They are regulated, and your money is protected in case of failure.

I once had money in a bank that failed. I still have the money.

That isn't true of anyone who had money in a failed crypto exchange. Almost all of which have failed in the last few years.

Transferring money from a bank account to an unregulated crypto exchange is risky.

And you completely ignored the fact that I didn't. I even suggested researching free banking.

I accept those risks. People use to accept those risks with banks too. Anyone remember Mary Poppins or It's a Wonderful life?

I'm leaving this discussion as it's clearly useless to even agree with you upon anything, as you clearly don't read what is written. Instead you make claims that simple research would show to be untrue.

[murraypaul]

I accept those risks.

Which is what the new requirements are there to do, have you explicitly accept the risk.
We seem to have gone in a circle.

The rules are required when transferring money to a crypto exchange, but not to a broker, or even a gambling site, because crypto firms are not onshore and regulated, so cannot be trusted.

[mjbdreamer]

""That isn't true of anyone who had money in a failed crypto exchange. Almost all of which have failed in the last few years. ""

Not always bad - I lost money on a failed (hacked) exchange. It has taken ten years but I will receive approx $45,000 for every $100 I lost. Slightly better than a savings account return.



What I would suggest as a result of that experience, is to create a coinbase account, buy $100 of bitcoin for each of the children/grandchildren. Send that bitcoin to a private wallet (off-exchange). Future mortgage for kiddies paid, or at least a great deposit. Just a thought. I've assumed the planet hasn't been totally destroyed by then of course.