The Financial Conduct Authority (FCA) of the U.K. is looking to relax some regulations for cryptocurrency firms, as reported by the Financial Times (FT) on Wednesday.
Conversely, the FCA aims to strengthen regulations related to specific industry risks, such as cyber threats.
The regulatory body is seeking to modify its current rules for financial services to address the distinct characteristics of cryptoassets, according to the FT’s consultation paper published Wednesday.
“It’s important to understand that some of these elements are quite different,” stated David Geale, the FCA’s executive director for payments and digital finance, in an interview. He emphasized that a simple “copy and paste” of traditional finance regulations would not work for cryptocurrency.
One particular area that may be approached differently is the requirement for firms to “conduct their business with integrity” and “give due regard to the interests of their customers while treating them fairly.”
Crypto companies could face less stringent obligations than banks or investment platforms regarding senior managers, systems, and controls, as the FCA noted that cryptocurrency firms “do not usually present the same level of systemic risk.”
Additionally, firms will not be required to provide customers with a cooling-off period due to the volatile nature of cryptocurrency prices, nor will technology be categorized as an outsourcing arrangement necessitating additional risk management. This is because blockchain technology typically allows for permissionless participation without the need for an intermediary.
Other aspects of crypto regulation are still under discussion.
The FCA intends to fully incorporate cryptocurrency into its regulatory framework by 2026.
