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UK’s FCA vows no bias in crypto regulation, size doesn’t guarantee approval

TL;DR

  • The UK’s FCA stands firm on crypto regulation, unswayed by company size.
  • FCA warns crypto firms of strict action for non-compliance with new promotion rules.

The UK’s Financial Conduct Authority (FCA) has sent a clear message to the cryptocurrency industry: meeting anti-money laundering requirements is mandatory, irrespective of a company’s size or market share. In a recent Treasury Select Committee hearing, FCA CEO Nikhil Rathi emphasized that the organization remains unbiased in granting regulatory approvals to crypto firms. The firm’s size or influence in the crypto market does not guarantee them an automatic ticket to operation.

Over the past two years, the FCA has received over 300 applications from cryptocurrency firms wishing to operate in the country. Despite the flood of interest, only 42 companies have successfully registered with the regulator. Rathi stressed that the stringent selection process did not reflect the FCA’s stance against innovation. Instead, the regulator is committed to maintaining clean markets in the UK and ensuring that registered firms uphold high anti-money laundering standards.

Notably, the FCA has rejected applications from some of the world’s largest crypto firms, including Binance. The leading crypto exchange failed to convince the regulator that it could meet the required anti-money laundering standards, leading to the refusal of its application.

Preparing for a robust crypto authorization regime

Looking ahead, the UK could see a shift in its crypto regulatory landscape. A new authorization regime could soon require all crypto firms wishing to operate in the country to apply for an FCA license. This applies to both domestic and overseas companies targeting local customers.

This development follows the introduction of the country’s new markets bill in June, which granted the FCA enhanced powers to regulate the crypto industry and ensure consumer protection. As a part of this initiative, Jonathan Cavill of Pinsent Masons highlighted that firms marketing crypto assets to UK consumers must comply with the upcoming expansion of the financial promotions regime.

The new regime, set to be implemented on 8 October 2023, would allow for only four lawful methods of promoting crypto assets to UK consumers. Firms breaching the financial promotions rules could face severe penalties, including a two-year prison term, unlimited fines, or both.

Cavill also pointed out that the FCA expects crypto asset firms to prioritize the welfare of consumers. The regulator has proposed introducing a 24-hour cooling-off period for first-time investors in high-risk investments, including crypto assets. The requirement aligns with the regulator’s principle of “same risk, same regulatory outcome.”

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

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Damilola Lawrence

Damilola is a crypto enthusiast, content writer, and journalist. When he is not writing, he spends most of his time reading and keeping tabs on exciting projects in the blockchain space. He also studies the ramifications of Web3 and blockchain development to have a stake in the future economy.

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