The UK financial regulatory agency sticks to its decision to continue implementing stringent rules in the registration process of businesses involved in cryptocurrencies.
The Financial Conduct Authority (FCA) asserted that UKās tough regulations on crypto firms serve as a deterrence to prevent these companies from becoming conduits for any money laundering activities.
Strict Rules Necessary
The FCA upheld the strict registration process under the Money Laundering Regulations (MLRs), stressing that the regulations are vital to safeguard the integrity of the UKās financial system.
In a statement, Val Smith, head of payments and digital assets in FCAās authorizations division, said that the standards will set the stage for a thriving, competitive cryptocurrency sector that protects the people and the financial marketsā integrity.
Smith defended the MLRs from critics who argue that the rigorous regulations may stunt the growth of the UKās cryptocurrency sector.
Dealing With Money Laundering Seriously
Smith said that the regulatory office aims to keep crypto firms from being conduits of money laundering activities even if the consequence is a lower number of crypto businesses getting registered.
āWe never turn applications down out of hand. But we treat the risk of firms being used for money laundering extremely seriously. Allowing illicit money to flow freely can destroy lives,ā Smith said.
He added that the MLR requirements help tackle āreal-world issuesā such as organized crime, terrorism, and human trafficking.
Maintaining Universal Standard
Smith explained that relaxing the governmentās standards in crypto firm registration that creates āa race to the bottomā will not ensure the protection of the people and the markets, saying that āinnovations built quickly on unsafe, unregulated and untrusted foundationsā are like houses built on sand which will eventually collapse.
She said the regulator wants to closely collaborate with partners across government, industry, and other jurisdictions to develop a crypto sector thatās built on reliable, sturdy foundations.
āBy doing this we can help enable safety, security, and sustainable growth for years to come.ā
She noted that an essential part of a competitive crypto sector is to set and maintain standards that people can trust.
āThatās why we hold all firms seeking registration, not just crypto firms, to strong and universal standards.ā
The financial watchdog has been implementing MLRs since January 2020 which require companies involved in crypto-related activities to register their business with the FCA.
MLRs required these companies to conduct risk assessments. They also need to implement due diligence on their customers and assign a Money Laundering Reporting Officer.
UK Is Not Alone
Regulating cryptocurrency-related activities is not endemic to the UK. Other countries are also taking necessary measures on their crypto sectors.
A good example is the European Union. The regional bloc has crafted the Markets in Crypto-Assets Regulation (MiCAR), aiming to establish a single cryptocurrency market which ensures the protection of its consumers and market integrity.
Singapore and Switzerland, on the other hand, have become crypto-friendly hubs as well, after implementing policies that promote and nurture cryptocurrency startups.
Featured image from LAB51, chart from TradingView
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