UK's FCA Looking to Combine DeFi and Traditional Finance for Crypto Regulation
Summary:
The UK's Financial Conduct Authority (FCA) seeks to regulate cryptocurrencies like Bitcoin by combining elements of traditional financial systems and decentralized finance (DeFi). FCA director Matthew Long emphasized the need for equal regulations across traditional and crypto finance during a panel at the FT Crypto and Digital Assets Summit. He also stressed on combating elements harmful to both centralized and decentralized finance while maintaining the integrity of industries. The FCA, who has been observing the burgeoning UK crypto industry, reported approving 38 out of 300 crypto firms since 2020.
The United Kingdom's Financial Conduct Authority (FCA) is seeking to harness the best aspects of both traditional financial systems and decentralized finance (DeFi) when it comes to the regulation of cryptocurrencies such as Bitcoin (BTC). The optimal approach to crypto-market regulation has been a topic of debate among both the crypto community and authorities, with concerns arising about either over or under-regulation.
Matthew Long, the FCA director of payments and cryptocurrencies, proposed that an effective regulation method would fuse various approaches. He expressed this perspective during the FT Crypto and Digital Assets Summit panel discussion on May 8, mentioning that the goal was to glean the stellar elements of existing financial systems and adapt them to the unique characteristics of the crypto market.
Long emphasised the need for regulatory parity across traditional finance and the crypto sphere, stating that the FCA sought to crystallize identical risks and regulations. Nevertheless, he underscored the necessity of acknowledging the crypto sector's evolving global landscape and unique challenges.
The FCA director observed that they had encountered unforeseen complexities in aspects they had initially perceived as simple. Conversely, they had witnessed the successful implementation of elements originally projected to court widespread resistance.
Long also highlighted the harmful elements present within both centralized and decentralized finance during the panel discussion. He pointed out that there were already existing tools to combat money laundering within the centralized finance sector. Long revealed that the FCA was exploring strategies to safeguard the integrity of the crypto industry, aiming to eliminate harmful elements and foster a healthier environment.
The Financial Conduct Authority has been closely monitoring the burgeoning UK crypto industry— a significant player in the global crypto market. In August 2023, the authority disclosed that they had approved 38 crypto firms from a pool of 300 applicants since 2020. The FCA has shown a commitment to enhancing its ability to identify and deal with market abuse within the crypto industry and thwart the circulation of illicit crypto advertisements.
Published At
5/8/2024 3:44:08 PM
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