UK Regulator Faces Pressure From City Minister Over Crypto Rules
The City minister, Andrew Griffith, has urged the UK regulator to enhance flexibility and clarity regarding the recently implemented crypto advertising rules. These regulations have sparked a conflict between them due to differing perspectives on the digital assets market.
In a letter to the Financial Conduct Authority (FCA) on October 5, Griffith expressed the concerns of crypto companies about the wide-ranging and unclear nature of the rules, which prohibit unauthorized crypto firms from promoting their services to UK customers.
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The FCA’s primary objective is to protect consumers from the uncertainties associated with investing in crypto assets. These assets witnessed a significant decline in value last year, leading to the downfall of exchanges like FTX.
Importantly, these protective regulations extend their reach to all crypto firms regardless of their location, be it within the UK or abroad. Violators of these rules will face severe consequences, including hefty fines and potential imprisonment for up to two years.
Government Supports Crypto Industry in UK
Griffith informed Nikhil Rathi, the chief executive of the FCA, about complaints received from crypto firms regarding the extensive regulations and the absence of definitive guidance on compliance.
As a member of the government advocating for the UK’s crypto prominence, Griffith urged the regulator to show “forbearance” towards these firms during their transition period and promptly issue final guidelines.
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Prime Minister Rishi Sunak has been actively supporting cryptocurrency and advocating for a regulatory framework to promote its growth in Britain. In April 2022, while serving as chancellor, he tweeted about his stance.
“We want to see the businesses of tomorrow, and the jobs they create, here in the UK,”
The Treasury and Griffith offered no comment on the letter. Similarly, the FCA, responsible for issuing over 150 alerts regarding unauthorized cryptocurrency firms’ promotions in the first week of the new regime, chose not to provide a statement.
FCA Warns of Problems With Accelerated Timetable
The FCA expressed its concerns multiple times regarding the government’s decision to shorten the timeframe for implementing the rules from six months to four. The agency warned that shortening the implementation timeframe would create challenges within the industry.
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Griffith raised some concerns regarding the scope of the new rules. Certain firms were surprised to learn that decentralized finance (DeFi), a type of crypto trading that operates without intermediaries like exchanges, would be included. Additionally, they expressed unawareness of the potential implications on their global websites.