UK Watchdog Criticizes FCA's Delayed Crypto Enforcement Actions

• UK's Financial Regulator Criticized for Slow Enforcement Action on Crypto Firms
• Comparison with US Regulations
• FCA's Anti-Money Laundering Compliance Measures
• Drop in Crypto ATM Activities and FCA's Staffing Issues
• FCA's Handling of Unregulated Crypto Activities

UK's Financial Regulator Criticized for Slow Enforcement Action on Crypto Firms

The National Audit Office (NAO) of the UK has recently expressed concerns about the Financial Conduct Authority's (FCA) sluggish approach towards the enforcement of rules against crypto businesses. The NAO specifically noted the considerable delays in registering crypto firms and initiating action against crypto ATMs.

Comparison with US Regulations

While the US regulators have been making news with a massive $4 billion settlement with Binance, presently the world's largest crypto exchange, the UK's approach in comparison has been noticeably slow. The NAO stated in a Friday report, Even when an issue falls within the FCA's jurisdiction, or it possesses the authority to act, the execution of any enforcement action can take years.

FCA's Anti-Money Laundering Compliance Measures

Since January 2020, the FCA has been mandating crypto firms to register to comply with the nation's anti-money laundering regulations. Although the regulatory body started engaging with unregistered firms and conducting supervision tasks, it didn't start enforcement action against illicit operators of crypto ATMs until February 2023, as per the NAO's report.

Drop in Crypto ATM Activities and FCA's Staffing Issues

The NAO's report also highlighted a significant drop of 68% in reported crypto ATM activities in 2022. However, the report clarified that not all of this decrease could be credited to the FCA's efforts. The NAO also pointed out the slow processing of registration applications, citing the FCA's struggle with staff retention as a contributing factor. The report also mentioned that the FCA had trouble recruiting and retaining staff with crypto compliance skills due to high competition for such skills in the market.

FCA's Handling of Unregulated Crypto Activities

Between January 2020 and June 2023, the FCA managed around 1,400 cases related to unregulated crypto activities. The Financial Services and Markets Bill, passed earlier this year, has granted additional powers to the FCA over the crypto sector. This bill has recognized crypto and stablecoins as regulated financial services. The FCA has started to exercise its newly obtained powers, per the report.

Edited by Jonathan Stoker