Last week, the Treasury announced its plans to legislate for new regulatory powers to police the crypto industry, by limiting foreign crypto-related companies selling into the UK, making arrangements to deal with the collapse of firms, as well as enforcing clampdown on crypto advertisements by overseas companies.
The proposed powers will be part of the Financial Services and Markets Bill that is already before Parliament, and is destined to shape the post-Brexit UK financial sector. It will include sections specifically on crypto and stablecoins.
After the “implosion” of FTX, the third largest cryptocurrency exchange by volume, an urgent need for action was placed on the government. During 2022, the FCA increased the scrutiny it places on the money-laundering controls of UK-based crypto firms, however, the regulator lacks broader powers in protecting consumers in areas such as mis-selling, false advertising, fraud, and mismanagement.
The newly introduced powers will enable the FCA to oversee the crypto industry more broadly, and monitor how companies operate and advertise their products. “The UK is committed to creating a regulatory environment in which firms can innovate, while crucially maintaining financial stability and regulatory standards so that people and businesses can use new technologies both reliably and safely” a Treasury spokesperson reported last Monday.
FCA sources have indicated that more than 85% of crypto-related companies applying for FCA registration have failed to satisfy and/or pass the regulator’s anti-money laundering tests. FCA’s Chief Executive Nikhil Rathi added that the regulator is already being vigilant in areas where it has yet to acquire powers, and acting in such a way as to protect consumers by warning the public on the risk of investing in crypto assets.
UK Crypto industry leaders have been long calling for a more comprehensive and detailed framework in the UK, which will follow the footsteps of European Union’s Markets in Crypto-assets (MiCA) law, as well as other plans being developed in the US.
How can Complyport help?
If this article has raised any questions about the upcoming changes to crypto regulations, or you think your firm may require assistance, please contact Jan Hagen via jan.hagen@complyport.co.uk to book a free consultation.
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