UK FCA Plans $8M Cost Recovery from Crypto Oversight

Previous regulations and compliance issues in the cryptocurrency industry provide context for the UK FCA’s strategies.

In a statement published on March 19, the UK Financial Conduct Authority (FCA) declared its intention to recoup expenses amounting to $8 million from its oversight of stablecoins and cryptocurrencies.

The reimbursement of the funds will occur through the imposition of penalties on stablecoin issuers and digital asset custodians.

Primarily, the regulator intends to recoup £6.2 million ($7.9 million) associated with expanded stablecoin regulations.

Furthermore, an increase of £0.2 million ($254,400) will be recouped through financial promotions and perimeter expansion. Both amounts are classified as “cryptoassets” within the plan.

In aggregate, the sum of the costs that require reimbursement stands at £6.4 million ($8.1 million). The recouped funds will be incorporated into the annual financing requirement of the FCA, which amounts to £755 million ($960 million).

The agency’s 12-month business strategy includes recovery as an element, delineating specific regulatory objectives for the UK market.

The UK FCA will also continue its previous financial promotion regime for cryptocurrencies and assist in implementing a market exploitation regime for digital assets that is proportionate.

The comprehensive business strategy encompasses many topics and goes well beyond cryptocurrency regulation. It includes plans to assess the effects of artificial intelligence on markets and to regulate digital markets.

Historical Context and Regulatory Expansion by UK FCA

Prior events offer a historical backdrop for several of the FCA’s strategies. The expenses associated with the new regulations pertain to stablecoin regulations that the agency initiated efforts to implement in November 2023.

The forthcoming market exploitation regime is an expansion of regulations implemented in 2016.

Although these regulations addressed insider trading, unauthorized disclosure, and market manipulation, they were not designed with the cryptocurrency industry in mind. Since February 2023, the United Kingdom has contemplated extending these cryptocurrency regulations.

It has already been established that the UK FCA regulates financial promotions. The cryptocurrency industry was subject to these regulations in October 2023. Due to compliance issues, several cryptocurrency firms have withdrawn from the United Kingdom market, and an additional number have been placed on a warning list.