david hamilton of Pinsent Masons said one speech, delivered by Nikhil Rathi at the Peterson Institute for International Economics in Washington DC, “highlighted two key messages” that crypto businesses should take a close look at. Rathi told delegates that the US and UK had “agreed to deepen their ties” on financial innovation and were “exchanging views on crypto-asset regulation and market developments” , including “stablecoins” and exploring central bank digital currencies.
His comments come after the UK, US and Singapore announced the launch of the International Organization of Securities Commissions (IOSCO) Task Force on Decentralized Finance and Securities Market Integrity Risks. crypto at the beginning of the month. Rathi said: “These conversations are vital. We demonstrably support responsible use cases for the underlying technology while ensuring that this does not come at the expense of appropriate consumer protection or market integrity.
Hamilton said, “Obviously we can expect increased cross-border cooperation when it comes to crypto regulation. Countries have tended to develop their own methods of regulating the industry, with some imposing outright or sweeping bans on crypto activities and advertising. But others, including the UK and US, have taken a more nuanced approach with varying levels of risk appetite.
He added: “Mr Rathi’s comments are all the more significant in the context of the G20 Financial Stability Board (FSB) announcement earlier this month that it will consult on a new framework to promote international consistency in regulatory and supervisory approaches to crypto-assets and relevant markets. It will be interesting to see the proposals of the FSB.
Hamilton added that Rathi’s speech also indicated “the rigor with which the FCA assessed applications for registration of crypto firms” under the Money Laundering (MLR) Regulations 2017. He said: “While some crypto assets fall outside the FCA’s regulatory scope, it has nonetheless worked to ensure that companies have adequate policies and procedures in place to comply with MLRs. As regulators across various industries take an increasingly aggressive approach to MLR compliance, crypto businesses must ensure they keep their financial crime compliance standards high after registration. .
Rathi also described changes to the FCA’s remit after Brexit. He told delegates that having left the EU, the UK now had “a vital opportunity to further adapt our regulatory system to meet the challenges we face today” and to “strengthen the reach of our wholesale markets”.
Rachael Preston of Pinsent Masons said the speech demonstrated how the FCA “is seizing the opportunity to become a global player in the regulatory arena”. She added: “Expect to see a more collaborative, innovative and adaptive style of supervision in the future as the FCA continues to push the boundaries of a financial regulator’s role in modern society.”
Rathi said the FCA would maintain a “laser focus” on the quality of the data it collected, adding that the regulator’s decision to move some of its core systems to the cloud – along with investment in new solutions technological and analytical tools – “accelerated case management and better risk visibility”. He said the FCA was now able to automatically scan more than 100,000 websites every day for fraudulent activity targeting UK consumers, taking down hundreds of such sites every year.
Preston said: “Once again the FCA stresses the importance of data for the future of UK financial regulation, both from a regulatory and supervisory perspective. Technology solutions will also play an increasingly central role in FCA’s modernization plans and will be crucial in enabling it to respond quickly and effectively to emerging trends and threats. The question is whether such an approach can produce the right results in an increasingly complex, nuanced and user-experience driven market.