UK financial watchdog exec hints at importance of international collaboration on crypto regulation

Published at: July 14, 2022

The chief executive of the United Kingdom’s Financial Conduct Authority, or FCA, said the U.K. government will be working with its counterparts in the United States to address a regulatory framework for cryptocurrencies.

In a speech for the Peterson Institute for International Economics on Thursday, FCA chief executive Nikhil Rathi said the U.S. and the U.K. will “deepen ties” on crypto regulation following discussions among regulators at the Financial Innovation Partnership on June 29. In addition, its government has coordinated with the U.S. and Singapore to launch an International Organization of Securities task force aimed at “decentralised finance and crypto market integrity risks.”

Rathi added that the FCA did not have the power to authorize the creation of a regulatory framework for crypto in the United Kingdom, as many of its rules in the space related to Anti-Money Laundering, or AML. "We sounded the alarm over supervising Binance and placed restrictions on it so it could not undertake any regulated activity in the UK without written consent," they said:

“Many of the issues we face also require an international response. We greatly value ongoing enforcement cooperation between the FCA and US agencies, including the SEC, CFTC and DOJ in particular, which has created an important set of precedents that demonstrate the ability to act effectively on a global basis.”

“In the past, innovative firms would have been pleading for less regulation,” said Rathi. “Now they understand and appreciate that rules are there to help provide certainty.”

Our relationship with US regulators is essential in delivering consistent outcomes, deepening ties on #crypto-asset regulation and #market developments https://t.co/U7GHcq6kzp

— Financial Conduct Authority (@TheFCA) July 14, 2022

Many regulators and lawmakers across the globe and within the European Union seem to be calling for international cooperation and coordination to address risks and opportunities related to crypto and blockchain. The Financial Stability Board, a global financial regulator for many countries including those within the G20, said on Monday it will be proposing international regulations for crypto and stablecoins in October. In accordance with President Joe Biden’s executive order from March, the U.S. Treasury Department also presented a framework on crypto in which government agencies can work with their foreign counterparts.

As the U.K.’s financial regulator, the FCA monitors roughly 51,000 financial services companies and financial markets across the country, including the 35 registered crypto firms it has approved to operate in the country since August 2020. Starting in January 2023, Hong Kong Securities and Futures Commission CEO Ashley Alder will be the next chair of the FCA.