Crypto may have finally got the nod from the regulator… but it’s still an enormous risk, warns ALEX BRUMMER

There has been no stronger voice on the risks of cryptocurrencies than the city’s regulator, the Financial Conduct Authority (FCA).

Therefore, the watchdog’s decision to approve trading in bitcoin and ethereum-backed instruments represents a Herculean U-turn.

The pressure for Square Mile to open its doors to crypto assets has been strong. The FCA tries, as far as possible, to prevent retail investors from being attracted to a speculative asset.

Some consider Bitcoin to be a commodity like any other. But unlike gold, there is no depository with piles of bullion or climatic factors that determine the price, as is the case with orange juice, coffee or chocolate beans.

London’s hunger for the opportunity to trade bitcoin and ethereum-based exchange-traded notes (ETNs) is competitive.

The launch of cryptocurrency exchange-traded funds (ETFs) in New York has been a resounding success, absorbing some $10bn (£7.8bn) since its launch in January.

It has proven to be a haven for speculators, driving the price of bitcoin up to $71,300 in recent trading.

When it hit a previous high of $60,000 a couple of years ago, I remember a prominent New York investment banker warning at a lunch in the UK that it wasn’t worth $6,000, $60, or $6. The actual value was zero.

Anyone willing to get involved in bitcoin or other cryptocurrencies should remember that the Securities and Exchange Commission (SEC) became reluctant to bitcoin ETFs and only approved trading after an unwanted court decision. There has been no such imperative in the UK.

City Minister Bim Afolami is an advocate and maintains that cryptocurrency trading is essential to the modernization of London markets.

It is to be hoped that the authorities in Amsterdam were equally enthusiastic in the mid-17th century, when the tulip bulb bubble was seen as part of the flowering of a golden age of Dutch capitalism.

The London Stock Exchange does not want to miss this trading opportunity. To satisfy critics, UK funds will be prevented from using leverage and custodians will be limited to jurisdictions with anti-money laundering rules.

No one wants to see a repeat of the abuses seen like Sam Bankman-Fried’s FTX or Binance, where funds ended up in the hands of terrorist groups.

Anyone thinking about investing in London-based crypto funds should be aware of the huge risks.

There is a lack of transparency about Bitcoin mining or creation. The computing power required is a fantastic waste. Furthermore, anti-money laundering regulations have proven to be as leaky as a sieve.

Staying away.

Curry’s escape

Alex Baldock and the Currys board were under no obligation to engage with Elliott Advisors.

The £757m bid for the electrical goods retailer was laughable. The bid barely reflected the ‘London discount’ – the undervaluation of many FTSE 350 shares.

He showed no appreciation for the improved business prospects, including the group’s mobile and care and repair activities.

The lesson is that companies have no obligation to fall into the arms of predators in the first round of shrapnel.

Elliott may have opened the door to another predator with deeper pockets. China’s JD.com is in the frame, with a deadline for a formal offer within six days.

Allowing the UK’s leading electronics group, with a major mobile phone operation, to fall under Beijing’s control is unattractive from either a commercial or security point of view.

Retailing electronics and electrical products is a struggle in the online era. Currys is trying to cope with the situation at home and in the Scandinavian hinterland.

There is more to come.

game changer

Redditt rose to prominence in January 2021, in the middle of a pandemic, in a social media stampede toward so-called meme stocks like GameStop.

Founder Steve Huffman’s gossipy, online, commission-free model introduced a whole new cohort of millennial and younger investors to the allure of easy riches from the stock market.

Valued at just under £8bn at its peak, the IPO is estimated at £5bn.

Irresistible for all those meme fans.