Regulation of Digital Assets in the UK: Key FCA speech by Sarah Pritchard, Executive Director of Markets, Financial Conduct Authority, at City Week 25th April 2023:
1. Regulation may mitigate some of the harm but cannot stop all of the risk connected to Crypto
2. Crypto Financial Promotions treated similar to high risk investments and failure to comply will be a Criminal Offence
3. FCA welcome industry input to get the future practical regulatory regime right for clients, industry and the regulator. This is a hugely superb development in my view as the Banking / Asset Management Industry worked closely with FCA to develop world class Client Asset Rules ( that were subsequently copied by the EU )
4. FCA recognises blockchain and cryptoassets present opportunities for more efficient international cross border payments that are cheaper.
5. Rapid Massive Crypto Adoption: 42% of US Institutions & 67% of EU Institutions held crypto. 10% of individuals held crypto. Latest stats for the UK I saw showed 2,000,000 UK citizens holding crypto.
6. Rapid growth has attached scammers. 21bn $ sent to illicit addresses in 2022 ( 18Bn $ 2020) 6,300 scams reported to FCA during 2021 vs 1,600 in 2019.
7. 195 firms were either refused by FCA or withdrew their FCA application, nearly three quarters of all applicants.
8. Financial Promotions: Firms will have 4 months to implement changes once the government legislates. Applies to all marketing of cryptoassets to UK customers. FCA Registered firms should take note and prepare Financial Promotions policies, checklists and procedures now to ensure adequate systems and controls are in play.
9. Crypto Consultation: Firms encouraged to respond to FCA by 9am 30th April.
10. FCA correctly proposing to gain powers over firms conducting crypto activities to UK customers even if they don’t have origins or a UK base.
A number of very sensible suggestions set out by Sarah Pritchard and particularly encouraging that Industry engagement is so highly encouraged.