The U.K. Financial Conduct Authority (FCA) has revealed that it has dealt with over 1,400 crypto cases between January 2020 and June 2023. The regulator noted that “a shortage of crypto skills meant the FCA took longer than planned to register crypto-asset firms under money laundering regulations.”
1,400 Cases Related to Unregulated Crypto-Asset Activity
The U.K. National Audit Office (NAO) issued a report on Friday titled “Financial services regulation: Adapting to change.” The NAO, which examines public spending for Parliament, operates independently of the government and the civil service.
“The financial services sector is also undergoing significant changes: whole new sets of products, such as crypto-assets, and rapid advances in technology, such as AI, provide opportunities for innovation but also risks to businesses and consumers which the FCA [Financial Conduct Authority] must plan for,” the report details, adding that there were:
1,400 cases related to unregulated crypto-asset activity that the FCA has dealt with between January 2020 and June 2023.
The FCA began supervising crypto firms in January 2020 through money laundering regulations. Any firm wishing to exchange currency for crypto, vice versa, or safeguard crypto assets in the U.K. must register and be supervised by the FCA. Existing firms had to register by January 2021, while new firms must do so before operation.
“The FCA assessed 158 applications between 2020 and 2021. Only 29 firms were registered, and the others were withdrawn, refused or rejected. The FCA created a temporary registration regime for firms to continue to operate after the deadline while it completed their assessments, and all cases were resolved by March 2022,” the NAO report states. “While the FCA has required crypto-asset firms to comply with anti-money laundering regulations since January 2020, and began supervision work including engaging with unregistered firms, it did not begin taking enforcement action against illegal operators of crypto ATMs until February 2023.”
The report further explains, “There can be a significant delay between the FCA identifying an issue to tackle, and it taking regulatory action,” elaborating:
The FCA is aware it needs to maintain specialist skills to avoid causing delays in its work — for example, a shortage of crypto skills meant the FCA took longer than planned to register crypto-asset firms under money laundering regulations.
The FCA also monitors firms for violations of the financial promotions regulations. The report notes that the FCA has “a dedicated team to tackle high risk and illegal financial promotions,” adding that more than 3,150 crypto-asset scams were reported in 2020, rising to more than 6,300 in 2021 and more than 3,900 in the first half of 2022. “The FCA published a public list of unauthorised firms and since this list has been published more than 300 firms have been flagged by the FCA,” the report notes.
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