The United Kingdom’s, FCA, has been in the past, increasing its scrutiny on cryptocurrency startups, and its investigations are experiencing a hike of up to 74% from last year. On the other hand, proponents of decentralized software development models and open collaboration are upset about the FCA aiming to extend KYC/ AML regulations to the publication of open-source and zero-knowledge software.
The financial conduct authority in the United Kingdom has been ramping up regulations towards digital currency companies based in the region. It started increasing its activities last year when a number of eminent UK-based Wealth Management firms asked the FCA to add stringent regulation and policies towards digital currency companies.
At that time, Simon Miller, Scalable Capital’s CEO, announced his dislike for the crypto industry, saying, “people see the explosion of digital currencies and say, “I can make a lot of money quickly,” but that’s not investing, that’s gambling. It needs to be looked at.” A couple more of Wealth Management firms executives from Wealthyify and Nutmeg appeared to agree with Miller. Since then, the regulatory watchdog has been setting guidelines and standards for the crypto industry and has been warning the public about cryptocurrency-based contracts for difference, CFDs.
Recently, reports indicate that the FCA has increased its investigations concerning cryptocurrency operations and cryptocurrency firms by up to 74%, and is as of current looking into about 87 crypto startups this year alone. This percentage is remarkably higher than last year’s, when the initial coin offering stage was in full momentum.
The latest news that is coming from the financial conduct authority investigations includes the regulator’s recent “guidance on crypto-assets” report that was published by the authority in summer. The FCA research feedback and final guidance statements indicate that the regulator is not as such too stringent on digital currency operations.
Therein the report, the FCA proposes extending KYC/AML and CTF (anti-money laundering and counter-terrorism financing) rules to crypto companies that are based in the United Kingdom. The regulations would mandate companies including exchanges, wallet operators, and even token issuers, to collect user information. The FCA report declares, “A combination of market maturity, volatility, and a lack of credible information or oversight raises concerns about market integrity, manipulation, and insider dealing within crypto-asset markets.
Additionally, the report continues, “this may prevent the market from functioning effectively and damage its reputation.” In Clarifying the position of the FCA, the report further adds, “the aim of the guidance is to clarify what is regulated by the FCA, where regulation applies and what this means for firms. This means that firms that carry on regulated activities will need to be authorized. Firms and other market participants will also need to make sure they know and comply with the relevant regulatory obligations that apply to them.”