Crypto asset providers gained further clarity on the dos and don’ts of how to operate in the UK, where regulation of crypto has remained largely unaddressed over the past few years.
On Tuesday, the Financial Conduct Authority (FCA), Britain’s financial services regulator, published the findings of a review into the crypto sector. The review specifically focused on how firms were abiding by regulations around the promotion of crypto introduced in 2023.
The review has reiterated some of the standards UK crypto providers should adhere to. Recommendations include the use of personalised risk warnings, client categorisation, record keeping and due diligence.
In comparison to other financial products, crypto assets in the UK have been largely untouched by regulation until recently. The FCA’s recent review shows that the regulator is seeking to regulate crypto in a more consistent manner, says Nick Jones, Founder and CEO of digital-asset-as-a-service platform Zumo.
“It’s encouraging to see the FCA issue detailed and practical guidance on the do’s and don’ts of a financial promotions regime that has seen inconsistent industry-side implementation since its extension to cryptoassets in October last year,” Jones remarks.
“Latest actions demonstrate that the FCA will be active in pursuing both custodial and non-custodial providers marketing to UK customers, and engage directly to ensure remedial action.
“The question remains: is it enough to achieve the FCA’s policy objectives and are the largest industry players being held to account?”
Under the previous Conservative administration, the government often reiterated its ambitions to see the UK become a hub for crypto and other digital assets. This was summed up by Lisa Cameron MP, in a discussion with Payment Expert, as a ‘Digital Britain’, during the Pay360 conference earlier this year.
The country has seen legislation attempt to do so. The Financial Services and Markets Act 2023 provided some significant updates to the regulation of crypto assets, further defining what crypto assets are in the eyes of UK regulation.
This also marked a significant update on the Financial Services and Markets Act 2000, which didn’t provide as much clarity on crypto assets – likely due to the Act coming into force before the development of crypto and blockchain seriously took off in the late 2000s, with Bitcoin created nine years after the Act’s passage.
The change in government in July saw Labour seize electoral victory with a manifesto that included pledges around Open Banking and artificial intelligence (AI). There was no mention of crypto or digital assets in the party’s manifesto, however, so the government’s ambitions in this area are unclear.
What has been made clear, regardless of the government’s approach, is the FCA’s expectations of crypto asset providers.