The UK’s Financial Conduct Authority (FCA) has justified its stringent stance on registering cryptocurrency firms, emphasising that high standards are crucial for fostering a sustainable and reliable digital asset industry.
In a statement issued today, Monday, October 21, Val Smith, Head of Payments and Digital Assets in the FCA’s authorizations division, responded to criticisms that the regulator’s stringent requirements might hinder innovation in the crypto sector, asserting that the registration standards are not set “too high.” She emphasised that “innovations developed rapidly on unsafe, unregulated, and untrusted foundations are like houses built on sand—they’re likely to collapse.”
Smith acknowledged the evolving nature of the crypto industry and the challenges of adapting to new regulatory frameworks. She claimed that the FCA works closely with government partners, industry stakeholders, and other jurisdictions to foster a crypto sector founded on reliable and solid principles.
Over the years, the FCA has faced criticism over the limited number of registered crypto firms. In response, Smith highlighted that the FCA does not outright reject applications and is committed to addressing the risks of financial crime. “Allowing illicit money to flow freely can ruin lives,” she asserted, referencing issues related to terrorism, organised crime, sanctions evasion, and human trafficking.
She maintained that the FCA must prioritise consumer protection and the integrity of the financial system. According to her, upholding high regulatory standards is essential for fostering a “healthy, globally competitive, and vibrant crypto sector in the UK.”
The FCA undeniably maintains a rigorous stance on regulating the cryptocurrency industry. In September, the regulator reported that nearly 90% of crypto registration applications did not meet its anti-money laundering (AML) standards. It had also earlier evaluated cryptocurrency firms’ compliance with new financial promotion regulations in August. The assessment focused on personalised risk warnings, the 24-hour cooling-off period, client categorization, and appropriateness indicators. According to its report, while some firms showed good practices, many did not meet the required standards.
Smith, in her statement, added that the regulator is willing to collaborate with cryptocurrency firms throughout the application process by providing pre-application meetings and practical assistance.
“We genuinely want to work with you,”
Smith stated, urging firms to engage with the FCA early and use available resources.
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