A View From The Exchange – The FCA's vision for crypto regulation
03 July 2024
03 July 2024
The UK Government's call in February 2023 for input on a potential regulatory framework for crypto assets was a milestone moment. The subsequent consultation response in October 2023 crystallised the Government's vision: firms engaged in regulated crypto asset activities will be expected to uphold the same stringent financial crime standards as their counterparts in traditional finance once a comprehensive regulatory regime for crypto assets is implemented.
The FCA has echoed this sentiment through its proposed changes to the Financial Crime Guide (FCG) outlined in Consultation Paper CP24/9. The FCA's proposals are not designed to shock the system but rather to integrate regulated crypto firms into the established order, ensuring they have robust financial crime systems and controls in place. The FCA's goal is to facilitate a smooth transition for these firms to demonstrate compliance under a broader regulatory framework for crypto assets, which may be forthcoming under a new Government.
It is crucial for regulated crypto firms to remember that the FCG offers guidance rather than prescriptive rules. CP24/9 continues to emphasise a flexible approach and the FCA's willingness to engage with crypto firms through supervision and feedback. However, experience suggests that the FCA will expect firms to take the FCG into account when designing and maintaining their financial crime systems and controls. The broader trajectory is clear: each proposed amendment, regardless of its scale, nudges regulated crypto firms towards alignment with other regulated business when it comes to compliance requirements. It is prudent for firms to heed this direction and proactively adapt their systems and controls accordingly.
Author: Jonas Weissenmayer, Associate
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