Market abuse refers to practices that distort the fair and efficient functioning of financial markets, typically by manipulating prices or misusing sensitive information. This includes activities such as insider trading, market manipulation through wash trading or spoofing, and spreading false rumors to influence asset values. Regulatory bodies aim to prevent market abuse to maintain investor confidence and ensure a level playing field for all participants. Such conduct undermines market integrity.
Context
In the cryptocurrency sector, market abuse is a significant concern for regulators, who cite it as a reason for caution regarding broader digital asset adoption. The relatively unregulated nature of some crypto markets has historically made them susceptible to practices like pump-and-dump schemes. News often covers enforcement actions against individuals or entities accused of market manipulation in digital asset trading. Establishing robust surveillance and enforcement mechanisms is crucial for maturing the crypto market.
The FCA's consultation integrates digital asset service providers into the full regulatory perimeter, mandating alignment with Principles of Business and Consumer Duty standards.
The FCA's policy pivot normalizes regulated crypto exposure, compelling UK financial institutions to immediately update suitability and risk disclosure frameworks.
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