A UK Financial Conduct Authority Executive is eager to create new rules for the crypto sector on the island.
The UK’s Financial Conduct Authority (FCA) announced that it wants to work with crypto firms to create regulations for the industry, said Executive Director Sarah Pritchard at the City Week conference in London on Tuesday.
To Pritchard, crypto is a “one-time symbol of alternative rebellion – [that] has become more widespread,” and believes that to accommodate for the industry’s growth, appropriate regulations must be put in place.
The FCA is one of the main crypto regulators in the country, alongside the UK government’s financial arm, the Treasury. In February, the UK Treasury launched a crypto consultation to get feedback from industry stakeholders on what they should be regulating in the sector.
Currently, the FCA only has oversight over companies based in the UK. In the consultation, it was set out that this may change – with the FCA possibly hosting a new authorisation regime to have domestic and overseas crypto companies operate business legally in the UK. According to Pritchard, creating a regime for overseas companies is “an uncharted territory” for the FCA.
The FCA is also planning to bring on a promotions regime for digital assets, saying that it “will apply to all firms marketing crypto assets to U.K. consumers regardless of whether the firm is based overseas or what technology is used to make the promotion.”
“Let’s work together to shape our rules and regulations to benefit markets, consumers and firms as crypto goes from niche to mainstream,” Pritchard said. “Let us do it with our minds open to the potential gains and our eyes open to the risks.”
The FCA is known for being critical on the digital assets sector, having repeatedly warned customers on crypto risks. Out of the firms seeking to register with the FCA, only 41 crypto firms have been accepted. 195 of them were either refused, or have withdrawn, said Pritchard.
According to Chainalysis, the amount of crypto received by illicit addresses reached a record high of $20.6 billion last year. As crypto has gotten much suspicion from regulators from multiple bankruptcies in the industry, the FCA has been keeping a tighter watch on what may happen under their jurisdiction.
Last year, industry advocates in the UK have noted that the FCA has started to listen to them during its engagement meetings with the industry, called CryptoSprint.
“It was reassuring to participate in well-formed, open and frank policy discussions with the FCA,” Curtis Ting, then Kraken’s managing director for Europe, the Middle East and Africa (now Senior Managing Director of Global Operations at Kraken), said at the time.
“We were particularly encouraged by CryptoSprint’s foundational acknowledgement that offshore firms remaining unaccountable to U.K. regulations pose a challenge to the U.K.’s ambition to become a world-class fintech hub.”