Saturday, September 23, 2023

The U.K. Financial Conduct Authority (FCA) is not swayed by the size of crypto companies when granting regulatory approval, its CEO Nikhil Rathi told lawmakers at a Treasury Select Committee hearing on Wednesday.

The FCA is in charge of registering and overseeing crypto companies that wish to operate in the country under existing anti-money laundering requirements. The financial regulator has received over 300 applications from crypto firms since opening its register two years ago but only 42 firms have managed to register with the regulator so far.

“We went through a very tough period with the industry over the last 18 months or two years because we turned down applications from some of the largest crypto firms in the world,” Rathi said during the hearing. In 2021, the FCA famously judged that Binance, the world’s largest crypto exchange by trading volume, was not capable of being supervised.

“And we did that not because we were anti-innovation but because we were given a job to make sure money laundering standards were met and they could not convince us that they were meeting them, so we turned the application[s] down because we want clean markets here,” Rathi continued.

He also warned against regulators considering the size of the firm and market share when assessing applications for registration.

“There are some people that will try and suggest we should have a metric for market share and I just encourage everybody to think really hard about whether you really want a regulator to be talking about metric because that would give a bias towards larger companies,” Rathi said.

Instead, he wants regulators to make “robust decisions” when authorizing firms.

The U.K. could soon see a new authorization regime for crypto firms, which would require all companies wishing to operate in the country to apply for a FCA license – including oversees firms reaching out to local customers. The FCA was given more powers to regulate the crypto industry and ensure consumer protection when the country’s new markets bill passed into law in June, and more crypto rules are expected to follow.

Read more: UK Crypto Firms and Regulator Blame Each Other for Industry Exodus

Edited by Sandali Handagama.

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