FCA Under Fire: Cryptocurrency ATM Regulation Delays

The NAO expressed concerns about the FCA's regulatory efficiency in the cryptocurrency sector, citing a lack of specialized personnel

FCA Under Fire: Cryptocurrency ATM Regulation Delays
FCA Under Fire: Cryptocurrency ATM Regulation Delays

It took the FCA nearly three years to take action against illegitimate operators of cryptocurrency ATMs, according to the NAO. As part of a coordinated investigation, the FCA reportedly shut down 26 cryptocurrency ATMs on July 11.

Concurrently, the National Audit Office (NAO) of the United Kingdom has expressed apprehensions regarding the Financial Conduct Authority’s (FCA) regulatory efficacy in the cryptocurrency sector.

“While the FCA has required crypto-asset firms to comply with anti-money laundering regulations since January 2020, and began supervision work including engaging with unregistered firms, it did not begin taking enforcement action against illegal operators of crypto ATMs until February 2023.”

The NAO asserts in a recent report entitled “Financial services regulation adapting to change” that the FCA is sluggish in its response to and enforcement of measures against illicit activities within the cryptocurrency industry.

It is the absence of specialized crypto personnel, according to the NAO, that caused the delay in registering crypto firms seeking regulatory sanction from the FCA. “The FCA took longer than anticipated to register crypto-asset firms under money laundering regulations, for instance, due to a lack of crypto expertise,” the report stated.

According to a report on January 27, the FCA has only approved 41 out of the 300 regulatory approval requests made by crypto firms since the regulations went into effect in January 2020.

This follows the FCA’s recent publication of guidance material intended to assist crypto firms in comprehending the newly implemented regulations pertaining to crypto promotion.

It was reported on November 2 that the FCA had issued “finalized non-handbook guidance” regarding adherence to the new regulations.

The new regulations govern, in particular, how cryptocurrency companies are permitted to advertise to customers.

Concerns identified by the FCA include crypto firms making assertions regarding the simplicity of cryptocurrency usage while neglecting to emphasize the associated risks, and risk warnings that are insufficiently legible in small font sizes.