FCA and cryptocurrency – Lexology

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

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

Rathi spoke of the opportunities and risks of crypto, calling it a “new commodity, easily accessible and able to operate across borders”, raising questions such as consumer protection, market integrity, data privacy and financial crime. As an example of his achievements, he cited the FCA having made an agreement with Google that it would not allow non-FCA verified companies to advertise financial products on their platform. He also explained how the FCA “sounded the alarm” over Binance’s oversight and imposed restrictions so that it could not engage in regulated activities in the UK without written permission.

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The chief executive explained that the UK and US had held discussions within the US-UK Partnership for Financial Innovation, where an agreement had been reached to deepen ties in financial innovation following an exchange of views on the regulation of financial innovation. crypto assets and market developments. The UK, US and Singapore have 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 strictly enforced these rules; with what Rathi calls “a significant number of companies” who have 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 the Innovation Hub program that helps financial services firms launch innovative products and services.

The FCA held its CryptoSprints in May and June this year, where regulators, academics, industry experts and investors gathered to discuss potential policy ideas in an effort to ask the regulator for industry views on the crypto market and to to examine how an appropriate Regulatory regime. Rathi said those involved in this exercise consider a regulatory regime for crypto-assets a high priority and want any regulation to be phased in so that businesses and investors can prepare and adapt to the rules imposed on crypto-assets. implemented.

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 serving as an observer – it works with other members to develop a coherent approach to regulation and policy-making, foster innovation, strengthen international engagement and collaborate with other regulators.

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

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