News: FCA Collaborates with Crypto Industry to Develop New Regulations for Mainstream Adoption in the UK

UK's FCA and crypto firms collaborate to shape regulation for mainstream adoption. New authorization and promotions regimes in the works.

The United Kingdom's Financial Conduct Authority (FCA) has announced its intention to work with the crypto industry to develop new regulations. This comes as part of a wider effort by the UK government to create a new regime for cryptocurrency, which has become increasingly mainstream in recent years.

The FCA's Executive Director, Sarah Pritchard, made the announcement at the City Week conference in London on Tuesday. She stated that the FCA is open to collaborating with crypto firms in shaping new rules and regulations for the sector. The FCA is one of the main regulatory bodies overseeing crypto in the UK, alongside the Treasury.

In February of this year, the UK government launched a consultation on cryptocurrency regulation, seeking feedback from stakeholders on how to regulate the sector. The FCA has been registering crypto firms to operate in the country, and the consultation outlined that the FCA may host a new authorization regime for crypto companies, including overseas companies.

This move into "unchartered territory" for the FCA is significant, as it will require the regulator to develop new processes for dealing with overseas crypto companies looking to operate in the UK. The FCA is also planning on launching a promotions regime for digital assets, which could help to raise awareness and understanding of cryptocurrency amongst consumers.

Pritchard emphasized the need for collaboration between the FCA and the crypto industry, stating that "let's work together to shape our rules and regulations to benefit markets, consumers, and firms as crypto goes from niche to mainstream." She also stressed the importance of acknowledging the potential gains of cryptocurrency, while remaining aware of the risks.

The FCA's previous stance on cryptocurrency has been somewhat critical, due in part to concerns around the use of crypto for illicit activities. Last year, crypto received by illicit addresses hit a record high of $20.6 billion, according to Chainalysis. The collapse of the FTX exchange also did not help the FCA's perception of the crypto sector.

Pritchard acknowledged that out of the 236 crypto applications received by the FCA, 195 were either refused or withdrew. Only 41 crypto firms have managed to register with the FCA. However, the FCA has also been listening to the concerns and feedback of the crypto industry at engagement meetings, according to industry advocates.

The move by the FCA to work with the crypto industry to develop regulation could be seen as a positive step towards mainstream adoption of cryptocurrency in the UK. With the rise of decentralized finance (DeFi) and non-fungible tokens (NFTs), it is clear that the crypto sector is not going away anytime soon.

The FCA's willingness to engage with the crypto industry in shaping regulation could also help to increase consumer confidence in the sector. By working together to develop clear and transparent rules and regulations, the crypto industry could become more accessible and trustworthy for mainstream consumers.

Overall, the FCA's announcement is a significant development in the UK's approach to cryptocurrency regulation. As the sector continues to grow and evolve, it will be important for regulatory bodies to remain open and adaptable in their approach to regulating crypto. By working with the industry, the FCA may be able to achieve this, and help to establish the UK as a leader in the crypto space.

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