The main thrust of these new regulations, however, has been in developing what the FCA calls 'positive frictions.' Piggybacking on previous decisions in 2023 to combat the rise of 'finfluencers,' such as banning refer-a-friend bonuses and other incentives from non-crypto investment sites, the FCA has aimed its new regulations at countering 'social and emotional pressures to invest'. In the main, this initiative amounted to one most controversial rule: quizzes and other competency tests on all major exchanges, preventing users from accessing their own funds.
The background for new regulations of this scale are, unsurprisingly, quite complicated. For starters, the FCA is a financial regulator that exists at the behest of the British government, but is not directly controlled by it. Although the Treasury does make appointments to this board, its daily functions are nevertheless independent of direct oversight. For example, the FCA's predecessor agency, the Financial Services Authority ( FSA), was founded in part to curtail the practice of industry self-regulation in the finance sector, which is a legally recognized type of trade association. In fact, CryptoUK, the self-regulating trade association in Britain's digital asset sphere, directly spoke against these new regulations.
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