UK FCA encryption technology gap is slowing implementation, the National Audit Office has said.
The UK National Audit Office (NAO) has raised concerns about the effectiveness of the Financial Conduct Authority (FCA) in regulating the cryptocurrency industry.
In a recent report titled ‘Financial services regulation: adapting to change’, the NAO claimed that the FCA has been slow to respond and take action against illegal activity in the cryptocurrency industry.
High staff turnover and lack of specialized skills increase the risk of: @TheFCAThis is the main promise of .
We responded by raising and spending £317 million on transformation programmes.
This will help prepare your financial services for the future.
See more: https://t.co/U66ep8J8Sp pic.twitter.com/GtG5TAjl4t
— National Audit Office (@NAOorguk) December 8, 2023
The NAO highlighted that it took the FCA almost three years to take action against rogue operators of cryptocurrency ATMs. On July 11, Cointelegraph reported that the FCA had shut down 26 cryptocurrency ATMs as part of a joint investigation. Meanwhile, the NAO said:
“The FCA began requiring cryptocurrency asset companies to comply with anti-money laundering regulations from January 2020 and began supervisory work, including co-operation with unregistered companies, but will not begin crackdowns on illegal operators of cryptocurrency ATMs until February 2023. “I didn’t do it.”
The NAO claims that the delay in registering cryptocurrency companies to receive regulatory approval from the FCA is due to the absence of cryptocurrency experts.
“For example, the lack of cryptocurrency skills meant that the FCA took longer than planned to register cryptocurrency asset companies with money laundering regulations,” the report said.
On January 27, Cointelegraph reported that since the regulations came into effect in January 2020, the FCA has approved only 41 out of 300 total cryptocurrency firm applications seeking regulatory approval.
Related: #1 cryptocurrency activity in the UK, Central, Northern and Western Europe: Chainalysis
This comes after the FCA recently published guidance material to help cryptocurrency firms better understand the new cryptocurrency promotion rules that recently came into effect.
On November 2, Cointelegraph reported that the FCA published “final non-handbook guidance” for compliance with the new rules.
The new rules specifically relate to how crypto companies can promote themselves to their customers.
The FCA outlined issues including cryptocurrency companies making claims about the ease of using cryptocurrencies without highlighting the risks involved, and risk warnings being in small font and not prominent enough.
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