The UK’s Financial Conduct Authority (FCA) has announced its intention to develop a regulatory framework for cryptocurrencies. Speaking at the City Week 2023 event, Sarah Pritchard, head of the FCA market division, emphasized the need for industry cooperation in establishing an appropriate regulatory framework for the cryptocurrency market.
Pritchard acknowledged that cryptocurrencies, once considered an alternative asset and niche market, have now become mainstream. She cited data from the Fidelity Institutional Investor Research Report, which found that 42% of US institutions and 67% of European institutions own cryptocurrencies. Similarly, a UK government survey found that one in 10 adults in the country owns a cryptocurrency.
Despite the growing popularity of cryptocurrencies, Pritchard warned of the potential risks associated with their use. She cited data from Chainalysis, which revealed that cryptocurrency crime reached an all-time high of $24 billion in 2018, up 68% from the previous year. Reports of cryptocurrency fraud filed with the FCA increased from 1,619 in 2019 to 6,372 in 2021.
To address these risks, Pritchard called for public discussion on the risks, mitigation measures, and regulatory limitations of cryptocurrencies. She emphasized that early and effective intervention could help establish regulations that benefit markets, consumers, and businesses alike.
Currently, the FCA has the authority to oversee the implementation of anti-money laundering (AML) and counter-terrorism financing (CTF) laws by cryptocurrency companies operating in the UK. However, Pritchard argued that additional legislation is needed for financial authorities to have more jurisdiction over cryptocurrencies.
The FCA is working closely with the UK government on a stablecoin regulatory proposal and a broader cryptocurrency regulatory framework. Pritchard also noted that regulatory work is underway to treat the promotion of cryptocurrencies the same as the promotion of high-risk investment assets.
The FCA’s move to develop a regulatory framework for cryptocurrencies reflects the growing mainstream acceptance of these digital assets. As the industry matures, it is becoming increasingly clear that regulation will be necessary to address the risks associated with cryptocurrency use. The FCA’s efforts to engage with the industry and develop appropriate regulations should be welcomed by all stakeholders in the cryptocurrency market.
Read more:
- SEC Names OMG, DASH, And ALGO Among Unregistered Securities
- U.S. SEC Has Taken Action Against Crypto Exchange Bittrex And Its Former CEO