The Financial Conduct Authority (FCA) of the UK has significantly expanded its team focusing on cryptocurrency regulations, now employing 100 staff members dedicated to this dynamic sector. This move responds to the growing complexities and regulatory challenges in the digital asset sphere.

According to a report by Financial News, which accessed the information through a Freedom of Information Act request, the team is organized into six specialized groups, each tasked with different aspects of crypto regulation.

Since 2020, the FCA has taken an active role in monitoring anti-money laundering and counter-terrorism financing within the UK’s cryptocurrency markets.

With recent legislative updates, the agency now requires that all crypto firms offering exchange services or custody solutions register with the FCA to operate legally. Additionally, the FCA now has the authority to oversee financial promotions related to crypto assets.

Ongoing Developments and Future Regulations

The FCA’s crypto teams are primarily engaged in licensing new firms and conducting subsequent oversight. In the past year, there has been a notable increase in staff within the police department, underscoring the continuous collaboration between the FCA and the UK government to craft detailed crypto regulations.

“Our increased staffing levels reflect our commitment to these priorities,” an FCA spokesperson explained, highlighting efforts to protect against financial crime and support innovative crypto businesses through the FCA’s Innovation Hub.

Moreover, the FCA is already preparing for future regulatory frameworks, particularly concerning areas like stablecoins, aiming to stay ahead of developments in the cryptocurrency market.

A Cautious Approach to Crypto ETPs

Despite the growing popularity of cryptocurrency exchange-traded products (ETPs), the FCA maintains a cautious stance. Currently, it restricts access to these financial products to professional investors only and mandates the use of recognized exchanges, explicitly barring retail investor participation.

In 2023, nearly a third of the FCA’s financial crime specialists were assigned to oversee crypto-related businesses. Their rigorous evaluations have revealed significant shortcomings in several firms’ anti-money laundering practices, resulting in numerous applications being withdrawn, rejected, or refused.

This structured approach by the FCA underscores its commitment to ensuring a safe and regulated market environment for crypto assets, balancing support for innovation with stringent oversight to protect both the industry and its consumers.