UK Financial Watchdog Seeks Cooperation with Crypto Industry

UK Financial Watchdog Seeks Cooperation with Crypto Industry

The UK's Financial Conduct Authority (FCA) is urging cryptocurrency businesses to collaborate in developing a clear legal framework for the sector. Speaking at the City Week conference in London on April 25, FCA executive director Sarah Pritchard emphasized the importance of industry engagement.

"We want the industry's input," Pritchard said. "As crypto moves from a niche to a mainstream industry, let's work together to shape our rules and regulations to benefit markets, consumers, and businesses."

She described cryptocurrencies as once being a "symbol of alternative rebellion," but acknowledged that they have become more mainstream.

Effective early engagement, she explained, encourages laws that benefit all parties and prepares businesses for upcoming regulations. She cited the FCA’s warning to cryptocurrency investors just a week before the FTX collapse, but emphasized that the FCA has always been open to innovation, noting that crypto assets and blockchain technology offer opportunities for more efficient financial services and products.

This cooperative approach contrasts sharply with strategies in the United States, where industry leaders often feel that regulators rely on enforcement rather than collaboration. Pritchard clarified that the FCA’s current remit is limited to ensuring crypto businesses operating in the UK comply with anti-money laundering (AML) and counter-terrorism financing (CTF) laws.

"We won't have more authority to regulate crypto unless the government passes legislation," she said. Currently, the FCA has registered 41 UK-based crypto firms, while more than three-quarters of 195 foreign registration applications were rejected or withdrawn.

Pritchard also highlighted upcoming changes in advertising rules, noting that legislation will set limits on cryptocurrency promotions and the promotion of risky investments. Companies that violate these laws will face strict penalties. Once the government passes the legislation, businesses will have four months to comply, with the rules published shortly after enactment.

The FCA has been working closely with the government on stablecoin regulations. Earlier in March, FCA officials recommended the introduction of crypto restrictions, which have been incorporated into updates of the Financial Services and Markets Act, currently awaiting adoption by the regulator.