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ALEX BRUMMER: Caging the crypto-currency tiger

ALEX BRUMMER: Crypto craze must be reined in to protect the financial world from collapse

THE Financial Conduct Authority has suffered more than its fair share of regulatory imbrogliheos in recent times, including London Capital & Finance’s collapse and the implosion of Neil Woodford’s investment empire.

So it is encouraging it has decided to take on the bitcoin buccaneers by ordering Binance Markets not to carry out any regulated activities in the UK.

The paradox is that although the UK can clamp down directly on its activities, it cannot stop British crypto-enthusiasts from logging on to Binance.com and its other overseas entities.

Clampdown: The Financial Conduct Authority has ordered crypto-currency exchange Binance Markets not to carry out any regulated activities in the UK

The rise of crypto-currency mania is one of the direct adverse outcomes of central bank money printing, which sent investors looking for new stores of value.

In the process, they have created an enforcement nightmare with crypto exchanges, which can be an open invitation to money laundering and fraud. 

There is the nightmare situation where it is almost impossible for the most innocuous of clubs or societies to open a bank account, but billions of dollars of crypto can be traded each day. 

The word of Tesla founder Elon Musk as to whether he will accept bitcoin in payment for electric cars can cause crypto to gyrate like a pneumatic drill.

If ever there was a case for action to stamp out the crypto craze and prevent the financial world from vulnerability to collapse, it is this. 

No one wants a repeat of the failure of Austria’s Creditanstalt, which helped trigger the Great Depression in the 1930s, or the Lehman implosion, which ushered in the great financial crisis.

Binance is not a minnow. It reportedly has a daily turnover of $500million. Its founder Changpeng Zhao – CZ to his mates – is thought to be worth $1.98billion, according to Forbes.

Japan has declared Binance to be operating ‘illegally.’ Germany’s financial regulator is unhappy about the issue of digital tokens without an investor prospectus. 

The US and IRS reportedly are probing whether Binance has been used for money laundering or tax avoidance.

The Chinese authorities last month ordered bitcoin and other crypto-currency miners to shut down their operations, triggering a plunge in prices. 

Refugees from Chinese bitcoin mining are fleeing to North America, but regulators will not be laying down a welcome mat.

There is a huge demand for crypto as an alternative to gold or other assets. The answer of the Bank of England and other central banks is to explore ‘Britcoin’ and other official and controlled crypto.

All a bit late as usual.

Chequered future

Chairman Gerry Murphy should know better than anyone the risk of a drawn out process to replace Marco Gobbetti as chief executive of Burberry.

Luxury groups are a little like potential European Super League football clubs. Even with the best resourced ownership in the world, without the right management in place, you can kiss success goodbye.

As Burberry transformed from trench-coat maker into something much better, it imported the coolest of American fashion brilliance in the shape of Rose Marie Bravo and Angela Ahrendts. 

The effort to turn the company’s innovative top designer Christopher Bailey into CEO was a mistake. 

Gobbetti brought back the zing and took the brand into new exalted territory, such as leather. Yet compared with other luxury goods makers the pandemic uplift in the share price lagged.

Succession planning at somewhere like Burberry is not the name of the game. What is needed is creativity and reputation, and that sometimes comes at a very high price, especially if the boss has to be sucked in from overseas. 

It is critical that the next CEO understands the value of Burberry to creative Britain, fully understands its UK manufacturing roots and skills base, and that overseas marauders are kept at bay.

One trusts that Murphy and his board have the backbone to resist fortune hunters who would struggle to find Castleford on the map.

Booking errors

Among the key findings of the Competition & Markets Authority on accountants was the idea of partnership audits where smaller firms learnt from their bigger counterparts.

Greensill demonstrates the difficulty. The bigger firms wanted nothing to do with it, which left comparative minnow Saffery Champness on the hook. The result is a disciplinary probe by the Financial Reporting Council. Aw shucks.

Read more at DailyMail.co.uk