Collaboration Call: UK Financial Watchdog Invites Crypto Industry to Join Forces

The FCA Seeks Input from Crypto Companies on Regulations

The Financial Conduct Authority (FCA), the financial regulator in the United Kingdom, is calling on crypto companies to collaborate in developing a regulatory framework for the industry. Sarah Pritchard, FCA Executive Director, emphasized the need for cooperation on crypto regulations during her speech at London’s City Week conference on April 25th. Pritchard highlighted that the FCA wants industry input to ensure that the future regulatory regime for crypto assets is appropriate. She encouraged collaboration in shaping rules and regulations to benefit markets, consumers, and firms as crypto moves from a niche market to the mainstream. Although Pritchard referred to crypto as a “one-time symbol of alternative rebellion,” she acknowledged that it has “become more widespread.” She emphasized that effective early engagement supports regulations that benefit everyone and helps firms be prepared when regulations come into force. Pritchard noted the FCA’s limited responsibilities in ensuring that crypto firms operating in the U.K. comply with Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) legislation. She added that the FCA’s powers to regulate crypto would only expand once the government legislates. According to Pritchard, the FCA has registered 41 crypto companies of all sizes and supported them. However, nearly three-quarters of the 195 total registrations from overseas firms were rejected, or they withdrew their applications for a U.K. license. Pritchard also mentioned that “tangible change” would come in the form of legislation for crypto promotions and advertising high-risk investments. She stated that current advertising rules carry heavy punishments for companies that breach them. Once the government legislates, the rules will be published, and firms will have four months to implement them. Pritchard noted that the FCA has been working closely with the government on its proposals to regulate stablecoins. She also mentioned the contrast between the U.K. and the U.S. approach to crypto regulations. American crypto industry members claim that local financial regulators are making every effort to quash the crypto sector with enforcement actions instead of developing meaningful regulations in collaboration with industry leaders. In early March, FCA officials told the government that crypto regulations were inevitable. The regulator is trying to push through the Financial Services and Markets Act, which was introduced in July and amended in October to include crypto regulations.

Conclusion

The FCA’s call for input from crypto companies highlights the need for collaboration in developing a regulatory framework for the industry. Effective regulation can benefit markets, consumers, and firms, but early engagement is essential to ensure that the regulations benefit everyone. While the FCA’s powers to regulate crypto are limited to ensuring compliance with AML and CTF legislation, tangible change is expected through legislation for crypto promotions and advertising high-risk investments. Collaborative efforts between the FCA and the government may lead to meaningful crypto regulations in the future.