UK’s FCA hands over crypto companies that applied for regulatory approval to law

• UK’s Financial Conduct Authority has approved 41 out of 300 applicants and referred some firms to law enforcement agencies. 
• FCA says that these firms have likely engaged in financial crime, as UK toughens crypto stance. 
• The debate on crypto regulation in the UK is an ongoing one with Transparency Bill being debated in the parliament. 

UK’s Financial Conduct Authority (FCA) is a regulatory body that oversees financial markets and firms in the country. The FCA is focused on protecting customer funds and ensuring integrity of financial systems. It recently referred several crypto firms that applied for regulatory approval to law enforcement agencies. 

Also read: US Senator Elizabeth Warren praises SEC Chair Gary Gensler for pushing the crypto genie back in the bottle

UK’s FCA has taken a tough stance towards crypto firms and regulatory approval applicants

The Financial Conduct Authority of the UK has the power to authorize and supervise firms in the financial sector. The FCA welcomed applications from crypto companies for regulatory approval in the UK. 

Interestingly, of 300, only 41 applications were approved. The regulator further referred some of these applicants to law enforcement agencies for an investigation into financial crime or a direct link to organized crime. 

Sarah Pritchard, executive director of markets supervision, policy and competition at the FCA said in a letter to the Treasury Select Committee, 

Overall, in the small number of cases where we have identified likely financial crime or direct links to organized crime we have referred these to law enforcement agencies. Some of those law enforcement investigations remain ongoing.

The FCA plays an important role in the development of policy and legislation related to financial services in the UK. 

The Financial Services and Markets Bill (FSMB) is crucial because it will make way for cryptocurrencies to be regulated in the UK. Currently, the FCA can ensure crypto companies register with it and comply with its anti-money laundering rules. The FSMB could expand the FCA’s powers to police the crypto industry.  

Industry experts believe that lack of crypto regulation has led to the recent steps by the UK FCA. Alexander Carter-Silk, Keystone Law’s cryptocurrency solicitor has advised on the regulation of crypto tokens such as Stable Tokens and Crypto Token Offerings. Carter-Silk told FXStreet,

Ill-informed statements by MPs that the entire crypto industry is a “Wild West” undermines a great deal of effort and work for investors to innovate in the world of digital assets. Crypto assets are new, their function and characteristics are being worked out and new forms of trading are risky, but that does not mean the innovators are cowboys.

The crypto solicitor believes that principles that apply are not matters for regulation, such as whether a digital token is property or some other intangible right. Carter-Silk argues that contrary to what Lord Hammond says, the UK would be well advised to stick to a gold standard that makes the country a choice for well-run honest businesses.

However, before we deal with the more esoteric issues, the FCA needs to publish and provide clear guidance for the standards it is applying under the existing legislation and that these are applied evenly and fairly.

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