Which financial intermediary is the most dangerous?

More than a third of Australians have heard of the term “fintech”, and some think they’re dangerous.

But according to the Financial Conduct Authority, the term can also be applied to a range of financial institutions.

“The word ‘fintechnical’ is commonly used in the financial services industry and the broader financial services sector to describe a group of services that provide digital services to financial institutions, as opposed to traditional financial products and services,” the FCA wrote in a new report.

“For example, one of the main purposes of digital currencies such as bitcoin is to make digital currencies more widely available and secure for users.”

While the report focuses on bitcoin and cryptocurrencies, it also highlighted the role digital currencies can play in “cryptocurrency markets”, where “a digital currency is traded on a digital exchange and is not subject to the jurisdiction of local or national regulatory authorities”.

“In particular, digital currencies are not regulated by any central bank, unlike traditional currencies, and do not have to adhere to strict financial reporting requirements,” it said.

Fintech is often associated with unregulated businesses that “dispute” with each other, which is a risk for consumers.

“In the financial sector, financial institutions are often the intermediaries that help other financial institutions to transact in cryptocurrencies and are often not subject on the same level of scrutiny as other financial services providers,” it continued.

“Some banks and credit unions are also among the most regulated in the world.”

The report found that there were “significant risks” associated with using cryptocurrencies and the unregulated nature of them.

“While cryptocurrency is a relatively new technology, it is often described as a form of money, and as such it is not regulated or monitored by any national or international regulatory authority,” it added.

The FCA said the digital currency market was “entirely unregulated”.

“There are risks associated with the use of cryptocurrencies, such as lack of regulation of the underlying technologies used to facilitate the transaction, as well as the potential for fraud, theft and abuse,” it noted.

“Financial intermediaries such as the exchanges, exchanges, payment processors, payment service providers, payment networks, and custodians of cryptocurrencies should also be mindful of the risks that they could face, particularly if they are not following the regulatory guidance and best practices in their industry.”

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