The latest implosion of crypto shows the advantages of the British approach

save yourself a thought of Matt Hancock. When the former British Health Minister is ready to avoid rats, snakes and cockroaches in the jungle, he will find that his favorite project also looks a bit incorrect.

Before the now former conservative MP decided to make a ritual TV demonstration by the British public to maintain his profile, he had loudly campaigned for the importance of crypto for Great Britain and the global financial system.

his considerations include such nuclear as "cryptocurrency began life that looked like a boom-and-bust-fashion phenomenon". The market capitalization of global cryptocurrencies has more than halved with less than $ 1 trillion since he wrote this in January after it had fallen by a third a year ago from her maximum of over $ 3 trillion.

The mainstream introduction of crypto should "shake the basics of the banking system," said Hancock. And while Great Britain should be the "natural place" to take this change and to lead, our glorious fintech future was hindered by "reactionary risk aversion among the regulatory authorities".

to be fair, Hancock has just read the room, or at least a room in Downing Street No. 11. In April, the Ministry of Finance stated that Great Britain should be a "global center" for crypto, with the promise of a (not yet seen) not fungable Royal Mint tokens and the suggestion that the supervisory authorities should do more and faster.

The reaction was slow, careful, bureaucratic and roughly correct. The sudden collapse of the FTX exchange this week and the downfall of the crypto exchange, which was closest to an institutional heavyweight in Sam Bankman-Fried, throws another light on the alleged failure of the supervisory authorities to open their arms for this market.

It is not clear what kind of liquidity crisis ftx has suffered to force it into the arms of the critic and rival bony what the further effects could be or whether this deal will actually take place. But it says nothing good about the development of crypto to the mainstream that his best -known member, who had run with celebrities, supported a stronger supervision of crypto and speculated about the purchase of Goldman Sachs, saw his business within a week.

The potential mass consolidation of the crypto compartment under the roof of Binance - a company that the Financial Conduct Authority said last year said that "it was unable to be effectively supervised" and "did not answer" on basic questions - do not implied that its assimilation in Main Street Final is becoming increasingly easier. Binance has undertaken since then to conform and to apply for the British supervision again.

The FCA, either by a sluggish coincidence or by intention, could feel something confirmed. It used its only powers to combat money laundering to introduce a registration system for crypto companies. Celsius Network, the crypto loan, had trouble being accredited in Great Britain before moving to New Jersey in 2021 and collapsing the following year. The regulatory authority had its warning on Binance in September one too FTX, which also tried to receive a license here.

explosions that happen elsewhere can be viewed as a profit, but disregard for regulatory subtleties or borders by crypto means that British consumers can still be violated. The FCA has campaigned for new restrictions on crypto advertising that appeared in every subway car. His main approach was to warn where non -authorized companies target British consumers, and to emphasize that those who deal with cryptos risk losing everything. If at all, it could have screamed louder.

"It would be unfair to spoil the entire industry in relation to what happens to FTX," said a consultant. "There are exchanges that are much more sophisticated and have really thought about this kind of topics."

The sector has complained about painfully slow and tricky licensing, while regulatory authorities counter that many applications were unable to get a mess. Similarly, the plan to include so -called stablecoins in the regulatory system was accompanied by regulatory rumors that no existing coins would meet the standards that are likely to be used.

There are many cases in which slow regulation leads to failure: Great Britain suffers from the unveiled leverage in the pension system, a form of shadow bank risk and the dangerous attraction of supposed security, which was never fully addressed after the financial crisis.

In a climate, in which politicians are still considering a convenient authorities to override regulatory authorities that are too careful or in the mud, it is worth mentioning where the wax dogs seem to have done something correctly.

It's a jungle out there.

helen.thomas@ft.com
@Helentbiz