UK Crypto Bill Amendment Gives Sweeping New Powers to Financial Watchdog

6 December 2022, 18:30 GMT+0000
Updated by Geraint Price
6 December 2022, 18:30 GMT+0000
In Brief
  • The UK's Treasury is finalizing plans for a package to regulate the cryptocurrency industry.
  • The proposed package would give greater powers to the country’s Financial Conduct Authority.
  • As part of the plan, the FCA would restrict the amount of companies able to approve advertisements.
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The Treasury of the United Kingdom is finalizing regulation on cryptocurrencies that would further empower the Financial Conduct Authority.

The proposed package would grant the FCA, the U.K.’s financial watchdog, broader powers to regulate cryptocurrencies in the country. These would include restricting companies selling from abroad into the U.K. market. The FCA has also put forward a consultation paper regarding its altered approach to marketing communications.

Empowering the FCA

Earlier this year, the FCA started investigating money-laundering controls of crypto companies based in the U.K. However, it currently lacks the authority to protect consumers with regard to fraud, mismanagement and false advertising. In spite of this, FCA chief executive Nikhil Rathi underscored his agency’s proactivity, including issuing warnings about crypto investing risks.

The FCA was given new powers as part of the Financial Services and Markets Bill. Parliament amended legislation in Oct. to include crypto.

Limiting Crypto Ads

As part of these powers, the FCA has proposed restricting the number of firms allowed to approve marketing communications. This would effectively withdraw the authority of companies empowered under the Financial Services and Markets Act 2000. By requiring such an additional level of authorization, the FCA hopes to monitor companies more closely.

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“Historically, we have seen too many noncompliant promotions being approved and then communicated by unauthorized firms to retail consumers,” the FCA said. Crypto companies would subsequently require approval from an FCA-authorized firm, which could result in a bottleneck. The FCA admitted that the number of firms competent enough to approve crypto advertisements “will be limited at first.” 

The proposed changes come as the U.K. government aspires to establish the country as a global crypto hub. Earlier this year, the then Chancellor of the Exchequer, Rishi Sunak, put forward a series of proposals regarding cryptocurrencies.

Now, as Prime Minister, Sunak is in a position to further his ambition of making a crypto hub of the U.K. According to a recent report, the country has become the second most business-friendly country for crypto companies.

Disclaimer

BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.