The Financial Conduct Authority’s regulatory approach to cryptocurrency companies has helped protect consumers from losing money from collapsed ventures, the financial watchdog’s chief operating officer has said.
Writing for The Times, FCA COO Emily Shepperd said that “some crypto firms were established elsewhere and have collapsed, with consumers last in the queue for getting their money back”.
Shepperd added: “We try to avoid these situations while also ensuring a welcoming, competitive environment for new businesses.”
While cryptoassets are not directly regulated by the FCA, firms must register with the watchdog to do business in the UK.
In March the FCA created a deadline for crypto firms to register. Shepperd said that this process has helped to ensure crypto companies comply with anti-money laundering rules.
“Most of the crypto companies we recently registered under anti-money laundering rules gained registration only after we had worked with them,” Shepperd wrote.
Crypto firms that fail to register with the FCA are operating without regulatory authorisation. The FCA has issued a warning that FTX, one of the largest cryptocurrency exchanges in the world and valued at $32bn, is operating without a UK crypto licence.
This means that UK-based FTX customers are not protected by the Financial Ombudsman Service or the Financial Services Compensation Scheme (FSCS), which means they are “unlikely to get [their] money back if things go wrong”, the FCA said.
Shepperd added: This approach has helped the UK to remain the most attractive destination for financial technology investment in Europe, and globally second only to the United States.”
It comes as the FCA, which is responsible for regulating the UK’s booming fintech sector, is on course to hire 1,000 new staff this year to support the regulators growing remit and workload.