Main Points
- The UK’s Financial Conduct Authority (FCA) has increased its
cryptocurrency division to 100 staff members. - The expansion addresses new regulatory challenges in the digital asset
market. - FCA’s role includes supervising anti-money laundering (AML) and
counter-terrorist financing (CTF) measures since 2020. - The government plans to grant FCA full control over UK cryptocurrency
regulations. - Recent legislative changes have expanded FCA’s responsibilities to
include oversight of crypto financial advertisements.
Comprehensive Analysis
FCA’s Expanded Cryptocurrency Division
On June 28, 2024, the UK’s Financial Conduct Authority (FCA) announced an
expansion of its cryptocurrency division, increasing its staff to 100
members. This move aims to tackle the growing regulatory challenges posed by
the digital asset market. The FCA has been supervising anti-money laundering
(AML) and counter-terrorist financing (CTF) measures in the UK’s
cryptocurrency sector since 2020, a role that has steadily grown over time.
Regulatory Responsibilities and Licensing
The FCA now requires cryptocurrency companies offering trading services or
custodial wallets to register with the authority, ensuring compliance with
AML and CTF regulations. The latest legislative changes have further
expanded the FCA’s remit, granting it authority to oversee financial
advertisements related to cryptocurrencies. The FCA’s increased staff will
primarily focus on licensing approvals and subsequent monitoring of
registered firms.
Policy and Cooperation with the Government
A significant portion of the staff increase in 2023 was allocated to the
policy division, reflecting ongoing cooperation between the FCA and the
government. This collaboration aims to develop more comprehensive
cryptocurrency regulations in the UK. The FCA’s spokesperson emphasized the
need to ensure cryptocurrency firms are protected against financial crimes
and support innovative crypto businesses through the FCA’s Innovation Hub.
Vigilant Approach and Industry Impact
Despite the growing popularity of cryptocurrency exchange-traded products
(ETPs), the FCA remains cautious, restricting access to these products to
professional investors using accredited exchanges, and not allowing retail
investor participation. In 2023, nearly one-third of the FCA’s financial
crime experts were assigned to oversee cryptocurrency businesses, leading to
numerous AML-related rejections and withdrawals of applications.
Future Outlook
The expansion of the FCA’s cryptocurrency division underscores the UK’s
commitment to stringent oversight and robust regulation of the digital asset
market. The enhanced regulatory framework aims to ensure market integrity
and protect investors, while also fostering innovation within the sector. As
the UK government prepares to grant the FCA full control over cryptocurrency
regulations, the industry can expect more comprehensive and enforceable
guidelines moving forward.
