On 6 September 2021 Charles Randell, the Chair of the Financial Conduct Authority (FCA) and Payment Systems Regulator, gave a speech to the Cambridge International Symposium on Economic Crime about the risks of token regulation.

In the wide-ranging speech, the Chair commented on cryptoasset scams, the role of the FCA in combatting financial crime online and the need for new legislation and FCA powers to address consumer harms associated with online paid-for cryptoasset promotions and scams.

Cryptoasset promotions and scams

The Chair noted that a Kim Kardashian post where she asked her 250 million Instagram followers to speculate on tokens by “joining the Ethereum Max Community” may have been the financial promotion with the single biggest audience reach in history.

While Kim Kardashian did disclose that her post was an advertisement, she did not disclose that Ethereum Max – not to be confused with Ethereum – was a speculative digital token created a month before by unknown developers. The Chair did not express a view as to whether Ethereum Max was a scam, but he did state that social media influencers are now routinely paid by scammers to help them pump and dump new tokens on the back of pure speculation. Some influencers promote tokens that turn out not to exist at all.

This type of hype creates a powerful fear of missing out from some consumers who may have little understanding of the risks. Despite the FCA’s warnings, around 2.3 million Britons currently…

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