The Financial Conduct Authority (FCA) of the United Kingdom is developing prudential requirements for companies that are involved in cryptocurrency activities. The regulator, which is responsible for keeping a registry of crypto firms that are compliant with the country’s anti-money laundering regulations, stated in its annual report published on Thursday that it will also consult on prudential rules for companies that are engaged in crypto activities once the Treasury and Parliament bring those activities under our regulation.
The FCA already has a prudential regime for investment firms such as fund managers, asset managers, and trading firms that are based in the UK. This regime requires firms to assess capital adequacy and risk in order to identify potential harm to investors and provide the necessary resources to mitigate such harm. Last year, the FCA issued a notice to firms with exposure to crypto companies, urging them to have appropriate systems and controls to counter the risk of being misused for financial crime, and to review if the firms they work with are registered crypto companies.
The FCA, which was granted a number of new powers under a recently passed financial markets bill, is set to become the UK’s main crypto watchdog as the country strives to become a global hub for the sector.