FCA and Cryptocurrency – Lexology

Rahman Ravelli’s Syed Rahman considers the Financial Conduct Authority’s ongoing response to cryptocurrency issues and cooperation between US and UK authorities.

In a speech at the Peterson Institute for International Economics, the Chief Executive of the Financial Conduct Authority (FCA), Nikhil Rathi, discussed the benefits of the US-UK collaboration on cryptocurrency. His speech also described how he sees his agency responding to the challenges posed by crypto now and in the future.

Rathi spoke about the opportunities and risks associated with crypto, calling it “a new product, easily accessible and capable of operating across borders”, which raised issues such as consumer protection, market integrity , data privacy and financial crime. He cited the FCA securing an agreement with Google that it would not allow non-FCA verified companies to advertise financial products on its platform as an example of his accomplishments. He also explained how the FCA “raised the alarm” over Binance’s supervision and imposed restrictions on it so that it could not undertake any regulated activity in the UK without written consent.

The Managing Director explained that the UK and the US had held talks under the US-UK Partnership for Financial Innovation, where an agreement had been reached to deepen ties on financial innovation after exchanged views on crypto-asset regulation and market developments. The UK, US and Singapore also announced the launch of the IOSCO (International Organization of Securities Commissions) Task Force on Decentralized Finance and Crypto Market Integrity Risks.

While the FCA’s mandate is currently limited to anti-money laundering rules for platforms, it has enforced these rules strictly; with what Rathi calls “a significant number of companies” having worked with the regulator to improve their controls and systems. He said the FCA has supported the development of many UK blockchain companies, with hundreds of companies going through its Innovation Hub program which helps financial services companies launch innovative products and services.

The FCA held its CryptoSprints in May and June this year, where regulators, academics, industry experts and investors came together to discuss possible policy ideas in an attempt to regulatory body to solicit industry views on the crypto market and to probe how to design an appropriate regulatory regime. Rathi said those involved in this exercise see a regulatory regime for crypto-assets as a high priority and want any regulation to be phased in so that businesses and investors can prepare and adapt to any the rules introduced for crypto-assets.

The FCA said its participation in the Digital Regulators Cooperation Forum has strengthened cooperation with the Office of Communications (Ofcom), the Markets and Markets Authority (CMA), the Information Commissioner’s Office (ICO ) and the Financial Conduct Authority (FCA). Became a full member in April 2021 – after having been an observer member – it works with other members to develop a coherent approach to regulation and policy-making, promote innovation, strengthen international engagement and work alongside other regulators.

In his speech, Rathi emphasized how much the FCA appreciates its continued enforcement cooperation with U.S. agencies such as the Securities and Exchange Commission, Commodity Futures Trading Commission and Department of Justice. This, he believes, “has created an important body of precedent that demonstrates the ability to act effectively on a global scale.”

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