UK financial watchdog to crypto industry: ‘Let’s work together’

The UK’s financial regulator, the Financial Conduct Authority (FCA), wants to work with crypto companies to develop a regulatory framework for the industry.

On April 25, FCA CEO Sarah Pritchard spoke at London’s City Week conference and highlighted the need for cooperation on crypto regulations.

“We want the industry’s input to ensure we get the future regulatory regime for cryptoassets right,” she said.

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

She referred to crypto as a “one-time symbol of alternative rebellion” but acknowledged that it has “become more widespread.”

“Effective early engagement supports regulations that benefit everyone and helps businesses be prepared when regulations take effect,” she added.

Pritchard cited a warning issued by the FCA to crypto investors a week before the FTX collapse in early November, but added “we’ve always been open to innovation,” stating:

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

The move stands in stark contrast to the approach across the pond in the US. Those in the crypto industry in America argue that local financial regulators are doing their best to shut down the crypto sector with enforcement actions as opposed to developing meaningful rules in collaboration with industry leaders.

Pritchard noted that the FCA’s responsibilities are limited to ensuring that crypto firms operating in the UK comply with anti-money laundering (AML) and anti-terrorism legislation.

“Only when the government legislates will we have more powers to regulate crypto,” she added.

Related: The UK’s FCA hints at why it has given only 15% of crypto firms the regulatory nod

According to Pritchard, the FCA has supported crypto firms and has registered 41 companies of all sizes, but almost three-quarters of the 195 total registrations by foreign firms were rejected or withdrew their applications for a UK licence.

Pritchard also mentioned that “tangible change” will come in the form of legislation for crypto promotions and advertising of high-risk investments. Current advertising rules have heavy penalties for companies that break them.

“This will come into our remit when the government legislates and firms will have 4 months to implement the changes,” she said. “The rules will be published after the legislation is brought forward.”

The FCA has also been working closely with the government on its proposals to regulate stablecoins, Pritchard noted.

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.

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