The FTX affair has significantly affected the crypto ecosystem and is prompting authorities to take action to put in place stricter regulations on what they call the “Wild West” of finance.
The UK Treasury is finalizing stricter rules in an effort to regulate cryptocurrencies in the UK. Especially for foreign companies selling their services in the UK to put in place restrictions on advertising as well as anticipating a mechanism to deal with business collapse.
Since this year, the Financial Conduct Authority (FCA) had already started to examine the money laundering controls of UK-based crypto companies but its competence does not allow it to have more powers to protect consumers against to areas such as :
- Abusive and misleading advertising,
- Improper selling.
The FCA is the authority for the financial markets in the United Kingdom. The financial sector now also encompasses digital assets.
According to sources close to the British Treasury, these new provisions will allow the FCA to have more control over the cryptocurrency industry. It will be able to monitor the operation of companies and the advertising of their products. There should also be more restriction for overseas based companies selling their product/service in the UK.
Currently, these new powers are part of the Financial Services and Markets Bill currently before Parliament.
Last April, Prime Minister Rishi Sunak, said while still chancellor that effective regulation would help make Britain a global hub for crypto-asset technology and encourage future companies to invest, innovate and grow on British shores.
Today, strict new provisions could very quickly emerge in the United Kingdom to strengthen the country’s regulations. Some government insiders believe that this could come into effect as soon as early 2023, following the latest events in the crypto market such as the bankruptcy of FTX and its consequences for its users.
The UK is committed to creating a regulatory environment in which businesses can innovate, while crucially maintaining financial stability and regulatory standards so that people and businesses can use new technologies reliably and securely.Treasury spokesperson at the Financial Times
The FCA has stressed that it is already proactive in areas where it does not yet have powers, in particular by warning about the risks of investing in cryptocurrency. Nikhil Rathi, the chief executive of the UK’s Financial Conduct Authority also said that 85% of companies that applied to join the regulator’s crypto registry failed the FCA’s anti-money laundering tests.
Times are complicated for the crypto ecosystem, after the last events of SBF and FTX the governments tend more to strengthen their regulation with the objective, it is hoped, to protect the users and holders of cryptocurrency and not to push back the possible opportunities of these new technologies.