I rarely write about cryptocurrencies and the colossal paraphernalia that surrounds them. I don’t understand their abstruse jargon or their purposely confounding technobabble. I don’t like the anti-government rhetoric that is at the core of their politico-narrative, the criminal activity that is perennially associated with them or their massive volatility based on no substance.

I’m therefore – unsurprisingly – also a firm believer that people need to be protected in dealing with the crypto asset world. But while I also abhor the trash celebrity culture that dominates much of the global mass and social media (we need to be protected from that too but that’s another story), I was delighted at the stir Kim Kardashian caused when she took that big fee earlier this year to promote Ethereum Max (EMAX) on Instagram; doubtless without a clue what it is.

It caused a stir because little was known about the purpose or backers of this brand-new token. Since the crypto world is riven with scams and other nefarious activity, a barrage of red flags went up.

As things turned out, Kardashian’s shameless paid-for promotion got the attention of Charles Randell, chair of the UK’s Financial Conduct Authority (FCA) and of the Payments Systems Regulator. Referencing her EMAX promotion in a speech in September certainly guaranteed him huge media coverage way beyond what he might have expected or hoped for. But could it unwittingly have strengthened the regulators’ hand in pushing for more robust crypto asset rules to protect retail investors and strengthen anti-money laundering and terrorist financing legislation, i.e., placing Kardashian as the perfect anti-hero?

UK and other regulators are rightly anxious about the viral spread of cryptocurrencies. Leaving aside the criminal aspect, they are hyper risky and massively speculative. Regulators know that consumers suffer from chronic fear of missing out (FOMO) and routinely respond to massively hyped-up media and social media activity – including paid-for promotions like Kardashian’s.

A recent FCA research study on cryptoasset ownership in the UK found that around 2.3 million consumers hold tokens. That’s about one in 22 of the UK’s adult population; quite a lot. Worryingly, one in seven has bought on margin, i.e., has borrowed money to finance their purchases, while one in eight thinks their losses will be covered by the UK deposit protection scheme. They won’t, of course. Few crypto assets are specified under the UK’s Financial Services and Markets Act 2000 so consumers will lose their shirts if things go wrong.

Notwithstanding the positive uses to which blockchain technology can be put and the potential role of stablecoins in providing competition in the payments market, it’s reasonable to accept as a basic premise that the riskiness of cryptocurrencies should push coin offerings and crypto asset trading more fully into the ambit of regulators.

The FCA does not regulate cryptocurrency tokens per se. It has banned outright the sale of crypto-derivatives to retail investors, while for tokens representing positions in regulated financial instruments, i.e., security tokens representing equities and bonds, it can exercise the same powers as for non-tokenized investments.

The FCA’s only current active role in the crypto world lies in registering UK-based crypto asset trading platforms and ensuring they comply with the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017. But the numbers here make for pretty stark and sobering reading. The FCA has registered just 12 crypto asset trading platforms. A further 61 have temporary licences, but the FCA has logged a staggering 219 unregistered exchanges. And those, it admits, are just the ones it’s aware of.

By law, unregistered firms must have returned any crypto assets to customers and ceased trading by January 10 2021. Those that have failed to do so are operating illegally so are subject to the FCA’s criminal and civil enforcement powers. This kind of thing hardly inspires trust in this world.

The FCA would like to see regulation in two areas: minimum standards around cryptoasset promotions (à la Kardashian); and preventing contagion of regulated businesses of authorised firms by unregulated activities in digital tokens. In the latter case, the Basel Committee on Banking Supervision is working on a proposal for banks to attract a full capital charge on their exposure to digital tokens.

There’s a veritable tsunami of regulatory and government consultations taking place as we speak around the need to regulate aspects of the cryptocurrency world. Just as fintechs providing banking services will (and should) end up being regulated as banks as appropriate, institutions providing cryptocurrency investment services should similarly be subject to investor protection and other regulations for which investment advisers are regulated.

And let’s not apply upside-down thinking to this; in other words, come to the conclusion that the very fact that crypto asset investments will eventually be regulated infers, implies or suggests in any way that they are necessarily, purely by dint of being regulated, bona fide investments or that government will step in to protect consumers.