As the cryptocurrency industry expands, it attracts an increasing number of players who expect to gain quick profits from the budding asset class even if it means breaking some rules, the phenomenon which did not miss the watchful gaze of the United Kingdom’s primary financial regulatory agency.
Indeed, Emily Shepperd, the Chief Operating Officer at the Financial Conduct Authority (FCA), has recently drawn attention to the portrayal of the world of finance as either dull or erratic and urged companies against encouraging behaviour similar to the glamourized versions of familiar financial players.
Less like Wolf of Wall Street, more like George Bailey
As she explained in her speech, delivered at City and Financial Global’s 8th Annual Culture and Conduct Forum for the Financial Services Industry on November 28, she said that things are far from what they seem, starting with the ‘Wolf of Wall Street.’
Picks for you
“In the Wolf of Wall Street, the main protagonist is a hedonistic stockbroker in his 20s whose main purpose is to con wealthy clients with a ‘pump and dump’ strategy before he is eventually jailed.”
Furthermore, she pointed out the story of Michael Burry or ‘The Big Short,’ in which “an eccentric hedge fund manager discovers that the U.S. housing market is based on sub-prime mortgages, so he sets up a credit default swap market to allow himself to short the property market.”
She added that:
“In fact, the only positive depiction of a financial services professional I could find was that of George Bailey, the main character in ‘It’s A Wonderful Life.’ But that was released in 1946.”
Finally, Shepherd urged senior leaders “to nurture healthy cultures in the firms they lead, (…) where employees feel psychologically safe to speak up and challenge, where remuneration does not encourage irresponsible behaviour.”
Crypto industry’s shortcomings
Focusing on the crypto market, in particular, Shepherd stressed that only “5% of crypto firms who applied to the FCA for registration showed that they understood anti-money laundering rules, but half of those who engaged seriously with us were registered.”
As she said, the agency’s policy-focused events in May and June 2022 have been a major eye-opener:
“The CryptoSprints (…) have highlighted the potential cultural clashes between those entrepreneurs who think the best way of dealing with rules is to smash them and regulators, who are busy pointing out why they cannot skim over these steps.”
However, the events have allowed the FCA, known for its stringent approach, which has earlier invited criticism, to better “understand how the crypto sector works and where the future opportunities lie and for the sector to see why we have regulations and what is expected of them.
Upholding higher standards
Shepperd’s views were echoed by Dominic Duru, the co-founder of DKK Partners, a consultancy firm specializing in emerging markets like crypto, who added that all financial players should do their part in raising the industry to a standard higher than simply profiting, according to his statement shared with Finbold on November 30.
As he stressed:
“Financial services firms play a vital role in driving the economy, creating jobs, and equipping staff with critical skills. However, our industry can do so much more to support charitable causes and spread opportunity to those who need it most. The value of a business goes way beyond the balance sheet, or the bottom line and we all have a part to play in this journey.
In conclusion, Duru highlighted that this refers to everyone, “from established banks to fintech start-ups,” all of which “have an important role to play in upholding the highest standards (…) in the workplace,” and that the rising living costs should motivate “firms to think deeply about the assistance they can give to their employees and wider society.”
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
