The Financial Conduct Authority (FCA) in the UK is standing firm on its stringent regulations for cryptocurrency companies, despite some pushback from the industry. The FCA believes these rules are essential for preventing money laundering and maintaining the integrity of the UK’s financial system.
Val Smith, who leads the FCA’s payments and digital assets division, emphasized that the rigorous registration process for crypto firms is designed to create a safe and competitive market that protects both consumers and financial institutions.
She addressed concerns from critics who worry that these regulations might stifle the growth of the UK’s crypto sector, stating that the FCA prioritizes preventing the misuse of cryptocurrencies for illicit activities.
Smith reassured that the FCA does not arbitrarily reject applications but takes the risks associated with money laundering very seriously. She highlighted the importance of these regulations in combating serious issues like organized crime and human trafficking, noting that allowing illicit money to flow through the financial system can have dire consequences for communities.
Furthermore, Smith warned against relaxing registration standards, suggesting that it could lead to a detrimental “race to the bottom.” She likened unregulated innovations to “houses built on sand,” which are destined to fail. Instead, the FCA aims to cultivate a robust crypto sector built on solid foundations, working alongside government, industry, and international partners.
The FCA’s overarching goal is to establish a secure and sustainable crypto industry that can thrive in the long term, ensuring that the standards set are trustworthy for the public and the markets.
Since January 2020, the FCA has enforced regulations requiring crypto businesses to register, conduct risk assessments, perform customer due diligence, and appoint a Money Laundering Reporting Officer.
The UK is not alone in its regulatory efforts; the European Union has introduced the Markets in Crypto-Assets Regulation (MiCAR) to create a cohesive framework for cryptocurrency, while countries like Singapore and Switzerland have adopted crypto-friendly policies, positioning themselves as attractive destinations for crypto startups.
