According to a recent research, British crypto firms are growing increasingly cautious of dealing with the country’s financial regulator. The survey suggests the increasing weary sentiment among the firms towards the Financial Conduct Authority (FCA) and its complex rules.
The research conducted by Censuswide, an insight-driven market research consultancy, between May 26 and July 2 involved over 500 industry compliance decision-makers. Reportedly, over a quarter of the participants objected the FCA’s approach to regulating the crypto products.
In their explanation, the respondents revealed that three-quarters have faced challenges with their FCA registration, and 37% have felt the need for additional guidance during the process. Interestingly, over-the-counter (OTC) traders showed more openness to the FCA’s involvement compared to crypto exchanges.
Currently, businesses operating as exchanges, crypto ATM firms, and custodial service providers for crypto assets are all required to register if they intend to operate in the UK. However, the FCA has a mixed history and reputation in the crypto industry, choosing to act ruthlessly some areas.
For instance, the regulator’s crackdown on crypto ATMs has been pretty evident in the past months. The FCA carries a no tolerance approach to crypto ATMs in the region and has raided numerous locations within a short span. As of this writing, only six crypto ATMs are active in the country, with authorities linking them to money laundering operations.
On January 26, the FCA stated that 85% of crypto asset firms failed to meet its standards for anti-money laundering and counter-terrorist financing. This fact prompted Harriett Baldwin, MP and Chair of the Treasury Committee, to refer to parts of the industry as a “Wild West.”
While some have found FCA’s approach to be reasonable, a major proportion doesn’t support the same. Andrew Boyd, co-founder and managing director at a firm, briefed media that the FCA’s regulation of crypto had been “marked by a careful, methodical approach.” However, the authority’s rigorous and stringent approach could be a “challenge for smaller companies.”
Contrary to that, On Yavin, Co-Founder and CBO at a different firm, told media that the FCA was “horrible” for crypto companies. He said that “not as much as the SEC, but horrible for sure.” In Yavin’s view, the FCA does not understand crypto. And its expertise falls especially short with respect to decentralized finance (DeFi). He added:
The FCA is not really helping crypto companies as they should help. The regulatory process for crypto companies is not clear and way too complicated. The FCA is not handling crypto scams as it should. I know this from my personal experience and a few other people I know who reported scams to the FCA but they completely ignored all scam alerts.
Simultaneously, Yavin also made comparisons to regulators in Germany, Japan, Singapore, and Hong Kong who are “doing so so much more.”
It is important to note that the regulator’s approach has been found to be contrary to the vision established by the British prime minister Rishi Sunak who wants to see the nation as a “crypto hub.” To this, on June 5, MPs who support the crypto industry called for the government to appoint a “Crypto Tsar” to help achieve that goal.
However, Andrew Griffith, economic secretary to the UK Treasury, told MPs on June 13 that it had no plans to do so. Additionally, coming back to the FCA, it pursues its campaign against crypto on many fronts.
Recently, the FCA has ramped up its crackdown on crypto advertising and social media “finfluencers.” The agency has warned crypto firms marketing to UK customers to comply fully with its guidelines by October 8, 2023. Recently, the FCA also warned that certain social media communications including memes may break its guidelines.