He added these policies should be based on real human behaviour, and only introduced when the system is ready to put them into practice.
Cryptocurrencies
Earlier this month, the FCA warned it has no oversight over cryptoassets and non-fungible tokens after it saw some recent social media posts regarding the investments.
Although it cannot comment on individual products, the City watchdog said at the time investors should be aware the FCA does not have regulatory oversight over direct investments in cryptoassets and NFTs.
Moving to the future of cryptocurrencies, Randell said that distributed ledger technologies have the potential to produce efficiencies in various parts of the financial system and the FCA is already engaging with these innovations.
However, he questioned what it would look like if the City watchdog also took on regulation of the issue and trading of speculative crypto tokens.
“Should people be encouraged to believe that these are investments, when they have no underlying value?,” he said. “When the price of Bitcoin can readily halve within 6 months, as it has done recently, and some other speculative crypto tokens have gone to zero?
“Should a couple with retirement savings of £250,000, which would buy them an annuity of perhaps £6,000 at age 65, be treated as 'high net worth' and encouraged or permitted to speculate on crypto or other high-risk products with these savings?
"Should people without any significant savings or financial experience be encouraged or permitted to buy speculative crypto at all?”
Randell added: “If the success of the FCA in regulating speculative crypto is going to be judged, and in due course no doubt it will be, these fundamental questions need to be properly and openly debated and answered well before responsibility passes to the FCA, rather than afterwards.”
In his speech, he referenced a meeting with a group of students, some of who acknowledged that crypto was like gambling, while others were convinced by the internet that they could predict price movements and make money from them.
“They were very able students, but the hope of getting rich was stronger than any facts or rational arguments I could give them,” he said.
“With celebrities as varied as Kim Kardashian and Larry David willing to take money to promote speculative crypto, how do we curb people’s enthusiasm to do something that may seriously harm their financial lives?”
Randell also said it was important to create a plan with the FCA, and other regulators where appropriate, to understand how long is needed to prepare, to understand how far many crypto firms will have to improve before they can be authorised and how consumers will actually behave online, supported by testing.
