FCA UK plans to combat crypto market abuse

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The Financial Conduct Authority (FCA), UK's regulatory body overseeing financial markets and services, has unveiled plans to clamp down on abuse within the crypto market, aiming to foster a fair and transparent regulatory landscape for cryptocurrencies.

In response to a recent government consultation seeking proposals for a targeted market abuse regime tailored to crypto assets, the FCA is doubling down on its efforts to protect consumers, uphold market integrity, and bolster international competitiveness in the crypto space.

The regulator's strategy revolves around enhancing its surveillance capabilities and implementing sophisticated analytics tools, including network analysis and cross-asset class visualisations, to thwart fraudulent activities within the crypto space.

Furthermore, the FCA is developing a market abuse framework exclusively designed for the crypto sector, ensuring an effective regulatory approach. Although such regulatory frameworks may appear burdensome for crypto companies operating in the country, the FCA expressed its intention to design the framework with the aim of fostering innovation and reducing industry expenses.

As the primary watchdog for cryptocurrencies in the UK, the FCA has also implemented stringent measures to regulate the sector in the past. These include a promotions regime mandating risk warnings and cooling-off periods for first-time crypto buyers. Additionally, consultations are ongoing to develop a regulatory framework for stablecoins.

The FCA is also ramping up its technological capabilities to identify and mitigate promotional material that poses risks to investors. Moreover, the regulator is intensifying consumer awareness campaigns to educate investors about potential scams prevalent in the crypto market.

The regulatory regime for crypto market abuse will apply to all individuals engaging on UK-based crypto exchanges, regardless of their location.
 
Earlier in October 2023, the FCA implemented new regulations governing marketing activities related to cryptocurrencies. Subsequently, on November 2, it released guidance specifically tailored for UK-based crypto firms to aid them in complying with these rules.

The regulator emphasised that these regulations were designed to align with existing standards for other high-risk investment products. Despite the provision of guidance, numerous crypto firms are still found to be in violation of advertising regulations.

On February 15, the UK regulator disclosed that it had issued 450 alerts for illicit crypto advertisements in 2023 alone. It reiterated its commitment to taking enforcement action against companies found breaching these rules and emphasised its ongoing efforts to combat illegal crypto marketing promotions throughout 2024.

The FCA's proactive approach to combating crypto market abuse underscores its commitment to fostering a fair and secure environment for investors. By enhancing surveillance capabilities, implementing advanced analytics tools, and crafting tailored regulatory frameworks, the regulator aims to promote market integrity and protect consumers.

Shashank is the founder of yMedia. He ventured into crypto in 2013 and is an ETH maximalist.
Twitter: @bhardwajshash