The U.K. Financial Conduct Authority (FCA) is open to collaborating with the crypto industry in developing a new regulatory regime. This is according to FCA Executive Director Sarah Pritchard, who spoke at Tuesday's City Week Conference in London. As the sector rapidly changes shape and grows into a mainstream business, the FCA is hoping to benefit both industry firms, markets and consumers.

The consultation on the new regulation regime from the Treasury was launched in February this year. For the FCA, this is an unknown space due to the possible inclusion of international companies, a step that could go against the body’s usual procedure for registration. Furthermore, the FCA is also looking to launch a promotion regime specifically for digital assets.

On the other side of the spectrum, the FCA has adopted a critical stance on the crypto industry. This is undeniably exarcebated by the illicit funds received in the form of crypto - amounting to $20.6 billion in 2020 according to data from Chainalysis - or the collapse of the FTX exchange. The FCA has actively sought to try to dispel the associated risks.

The registration process has been challenging: although there have been 245 applications, 195 have either been declined or had to withdrawn in part due to stringent regulations. A mere 41 have been approved by the FCA.

It appears, however, that the FCA is becoming more receptive to the crypto industry, with advocates noting the body's willingness to engage and hold meetings. As Pritchard pointed out, this collaboration is rivital to the success of the crypto sector; with both the industry and the regulatory body benefitting. All that remains is for an equilibrium to be achieved between safety and access.

The U.K.'s Financial Conduct Authority (FCA) aims to build a working relationship with the crypto industry, in order to develop an appropriate regulatory regime.Sarah Pritchard, the FCA's Executive Director, made this clear during Tuesday's City Week Conference in London. This approach is taken in the light of the growing popularity and importance of cryptocurrencies, in particular the high-profile example of Bitcoin.

The Treasury launched a consultation in February of this year, looking for input from stakeholders on how to regulate the sector. This consultation described the possible FCA authorization of both domestic and international crypto companies, an area outside of the usual rules and regulations. The FCA is also considering setting up a promotion regime specifically for digital assets.

Understandably, the FCA has sounded a note of caution regarding the crypto sector. This greater scrutiny is hardly surprising, given the illicit funds received via crypto - amounting to $20.6 billion in 2020 according to Chainalysis - and the failure of the FTX exchange. The FCA has sought to educate consumers on the associated risks.

To date, the majority of applications to register with the FCA have been rejected; out of the 245 applications, only 41 were successful. However, industry advocates have expressed their satisfaction at the FCA's willingness to dialogue and collaborate, between the industry and regulator, for the benefit of all.

Balancing the legitimate interests of the industry and safety for users of digital assets is the ultimate goal. Using open minds and staying informed of the potential gains and risks should hold the key to success, a sentiment echoed by Sarah Pritchard. Ultimately, it remains to be seen how the U.K. pursues the delicate balance between the two.



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