The chief executive of the UK’s financial watchdog has outlined the challenges of regulating cryptocurrency across international borders and warned that rejected firms can still reach UK customers “from offshore”.
“As we have consistently warned, if you invest in crypto, you need to be prepared to lose all your money,” said Financial Conduct Authority (FCA) chief Nikhil Rathi, reaffirming the organisation’s sceptical view of cryptocurrencies.
The FCA has repeatedly attempted to regulate the trade of cryptoassets in the UK, largely as a measure against money laundering, as well as for general consumer protection.
Earlier this year, the FCA set a now passed deadline for cryptocurrency exchange services operating in the UK to register for regulatory approval.
A total of 33 firms received this approval, with 12 granted temporary permission to continue trading. The list was then reduced to just five, containing companies such as Revolut and Copper.
The goal was to prevent unregulated firms from posing a risk to the UK, however, in his speech yesterday, Rathi made clear that the registration plan wasn’t enough.
“Another issue is that firms we reject can still service UK customers from offshore,” Rathi said.
He pointed to the international nature of the cryptocurrency industry, saying that while the FCA was “encouraged to see partner agencies follow our lead when we have rejected firms’ registrations, it is not enough to rely on our global influence. This needs wider consideration by policymakers”.
The UK government has been seeking to expand the country’s position in the world of cryptocurrencies. Chancellor Rishi Sunak recently declared his ambition to see Britain become a global cryptoasset hub.
Despite the chancellor’s goals, the UK’s financial regulator has been less keen to ramp up Britain’s crypto trading.
The FCA has previously challenged global cryptocurrency trading leader Binance for its UK operations, as well as Bitpanda, which sought regulatory approval through the acquisition of the FCA-registered Trustology