Regulation
Help tackle £24bn money laundering problem, FCA tells crypto firms – DL News
- FCA director says digital asset companies should be involved in cleaning up markets.
- The FCA is fighting claims it is stifling technological innovation in the UK.
Use technology to fight money laundering. This is the message from Matthew Long, of the Financial Conduct Authority.
“I still see £24 billion of money laundering in crypto transactions, and that’s a low estimate,” said Long, director of payments and digital assets at the UK’s markets watchdog. , during a conference in London on Wednesday.
Long said he looks forward to seeing crypto companies “use innovation to get there.”
“Let’s create a clean market first, then talk about things like using stablecoins for payments,” he said.
He was responding to a question about how the FCA can strike a balance between encouraging innovation and creating rules that protect investors and ensure safer markets.
This could be interpreted as a pointed question to ask the FCA.
Conservative politicians, keen to position themselves as a pro-business party ahead of this year’s general election, have insisted that the FCA’s strict regulations prevent crypto firms from thriving in the UK.
Economic Secretary to the Treasury Bim Afolami said last week that the regulator risks “undermining” the entrepreneurial spirit that drives crypto businesses.
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The FCA has only approved four crypto filers in 2023, as DL News reportedciting poor anti-money laundering provisions of registered candidates.
The watchdog has also cracked down on crypto ATMs and its marketing regime has caused participants including Binance and PayPal to suspend operations in the country.
State-of-the-art regulator
The FCA has however I insisted for years that it is a regulator at the forefront of technology, citing as evidence initiatives such as its regulatory sandbox – where fintechs can test product and service ideas.
Long also cited the FCA’s new Digital Securities Sandbox, or DSS, which allows institutional market participants to experiment with tokenizing financial securities like stocks and bonds.
The FCA launched the sandbox in January in conjunction with the Bank of England and launched a consultation in April aimed at refining how it works.
Long said the DSS is an example of how the regulator is evolving beyond retail consumer protection to institutional markets.
“We’ve moved from a retail position to a wholesale position, so from money laundering regulations and financial promotions, we’re taking the next step: working pretty hard on stablecoins as we move forward “, did he declare.
The UK government consulted on crypto regulation last year. As part of a phased approach to rolling out these rules, the FCA is currently working on stable coin legislation.
Afolami said these rules would be ready by mid-year.
“For me, it’s relatively simple [to use] “innovation to mitigate the risks we keep talking about, getting to a position where we’re comfortable with the current market and using tools like the Digital Securities Sandbox” to work with market participants, Long said .
Joanna Wright is regulatory correspondent for DL News. Contact her at joanna@dlnews.com.