UK banking watchdog urges crypto sector to collaborate

At the beginning of March, representatives from the FCA told the government that crypto laws were almost certainly going to be implemented.

UK banking watchdog urges crypto sector to collaborate
UK banking watchdog urges crypto sector to collaborate

The Financial Conduct Authority (FCA), the United Kingdom’s financial regulator, desires to collaborate with crypto companies to develop a regulatory framework for the industry.

Sarah Pritchard, the executive director of the FCA, spoke at London’s City Week conference on April 25 and emphasized the need for crypto regulation cooperation.

“We want input from the industry to ensure that the future regulatory framework for crypto assets is sound,” she said.

“Let’s work together, to shape our rules and regulations to benefit markets, consumers and firms as crypto goes from niche to mainstream.”

She described crypto as “once a symbol of alternative rebellion” but acknowledged that it has “become more prevalent.”

“Effective early engagement supports regulations that benefit all and prepares businesses for the implementation of regulations,” she added.

Pritchard mentioned a warning issued by the FCA to crypto investors a week before the FTX collapse in early November, but he added, “We have always been open to innovation,” stating:

“Crypto assets and blockchain offers opportunities for more efficient and innovative financial services and products.”

The move is in stark contrast to the approach across the pond in the United States.

Those in the crypto industry in the United States assert that local financial regulators are pursuing enforcement actions instead of developing meaningful regulations in collaboration with industry leaders.

Pritchard stated that the FCA’s responsibilities are limited to ensuring that crypto firms operating in the United Kingdom comply with AML and CTF regulations.

She continued, “Only when the government legislates will we have more authority to regulate crypto.”

According to Pritchard, the FCA has supported crypto firms and registered 41 businesses of all sizes; however, nearly three-quarters of the 195 total registrations from foreign firms were rejected or their applications for a U.K. license were withdrawn.

Additionally, Pritchard stated that “tangible change” will come in the form of regulations for crypto promotions and the advertising of high-risk investments.

Existing advertising regulations contain severe penalties for violators.

“Once the government passes legislation, this will fall under our jurisdiction, and businesses will have four months to implement the changes,” she said. “The rules will be published following the introduction of the legislation.”

Pritchard noted that the FCA has collaborated closely with the government on its proposals to regulate stablecoins.

At the beginning of March, FCA representatives informed the government that crypto regulations were inevitable.

The regulator is attempting to pass the Financial Services and Markets Act, which was introduced in July and revised in October to include cryptocurrency regulations.