UK Scrutinizes Crypto Regulation
The Bank of England’s Financial Policy Committee (FPC), the Financial Conduct Authority (FCA) and the Bank’s Prudential Regulation Authority (PRA) have published, citing each other, reports on the regulation of cryptocurrencies in the UK.
According to the FPC, crypto assets and DeFi are less risky for the stability of the UK financial system, but as the interconnection with the wider financial system grows, this risk increases.
The committee believes that the current regulatory framework is adequate to mitigate the risks associated with crypto technologies that operate like traditional financial systems. Therefore, the FPC has advised financial institutions to be cautious about adopting crypto assets or DeFi until the regulatory framework becomes more robust.
In this context, PRA Deputy Governor and CEO Sam Woods wrote a letter to CEO of banks, insurance companies, and designated investment firms, reminding recipients of existing policy and regulatory frameworks in the context of their growing interest, and asking them to complete a survey on existing cryptocurrencies and plans. organizations for the year until June 3rd.
The FCA notice reminded regulated firms of their “obligations when they interact with or are exposed to crypto assets and related services.”
The Office has paid special attention to anti-money laundering and registration, pointing to an extensive list of unregistered companies dealing in crypto assets. The Agency investigated the activities of a number of such enterprises.
In addition, the Bank of England published a paper “Responses to the Bank of England Discussion Paper on New Forms of Digital Money”, which made reference to a discussion paper released by the Bank last year on central bank digital currency. The FPC also noted that the Bank and Treasury will “begin consultations” on the CBDC this year.
Earlier, the UK Financial Conduct Authority (FCA) said that cryptocurrency ATM (ATM) operators did not obtain the necessary licences to provide digital asset exchange services, and therefore operate illegally in the country.
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