The United Kingdom’s financial regulator, the Financial Conduct Authority (FCA), wants to work together with crypto companies to develop a regulatory framework for the industry.
“We want industry’s input to make sure we get the future regulatory regime for crypto assets right,” she said.
“Let’s work together, to shape our rules and regulations to benefit markets, consumers and firms as crypto goes from niche to mainstream.”
She referred to crypto as a “one-time symbol of alternative rebellion,” but acknowledged that it has “become more widespread.”
“Effective early engagement supports regulations that benefit all and helps firms be prepared when regulations come into force,” she added.
— Financial Conduct Authority (@TheFCA) April 25, 2023
Pritchard mentioned a warning issued by the FCA to crypto investors a week before the FTX collapse in early November but added, “we have always been open to innovation,” stating:
“Crypto assets and blockchain offers opportunities for more efficient and innovative financial services and products.”
The move is in stark contrast to the approach across the pond in the United States. Those in the crypto industry in America claim local financial regulators are making every effort to quash the crypto sector with enforcement actions as opposed to developing meaningful regulations in collaboration with industry leaders.
Pritchard noted the FCA’s responsibilities are limited to making sure that crypto firms that operate in the U.K. comply with Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) legislation.
“Only when the government legislates will we have more powers to regulate crypto,” she added.
According to Pritchard, the FCA has supported crypto firms and has registered 41 companies of all sizes, however, nearly three-quarters of the 195 total registrations from overseas firms were rejected or withdrew their applications for a U.K. license.
Pritchard also mentioned that “tangible change” will come in the form of legislation for crypto promotions and advertising high-risk investments. Current advertising rules carry heavy punishments for companies that breach them.
“This will come into our remit once the government legislates, and firms will have four months to implement the changes,” she said. “The rules will be published after the legislation is put forward.”
The FCA has also been working closely with the government on its proposals to regulate stablecoins, Pritchard noted.
In early March, FCA officials told the government that crypto regulations were inevitable. The regulator is trying to push through the Financial Services and Markets Act which was introduced in July and amended in October to include crypto regulations.