The United Kingdom's National Audit Office (NAO) has expressed 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 has stated that the FCA is slow to respond and take action against illicit activities in the crypto industry.
High staff turnover rates and lack of specialized skills increase the risk for @LaFCAThe key commitments of
It has responded by hiring and spending ยฃ317m on its change programme.
This should help you future-proof financial services.
Further: https://t.co/U66ep8J8Sp pic.twitter.com/GtG5TAjl4t
โ National Audit Office (@NAOorguk) December 8, 2023
The NAO highlighted that it took almost three years for the FCA to take action against illegal crypto ATM operators. On July 11, Cointelegraph reported that the FCA had close 26 crypto ATMs as part of a coordinated investigation. Meanwhile, the NAO stated:
"While the FCA has required crypto asset firms to comply with anti-money laundering regulations since January 2020, and began work on supervision, including collaborating with unregistered firms, it has not begun taking enforcement action against illegal cryptocurrency ATM operators until February 2023.โ
The NAO claims that the delay in registering crypto companies seeking regulatory approval from the FCA was attributed to the absence of specialist crypto staff.
โFor example, a shortage of cryptography skills meant that the FCA took longer than planned to register cryptoasset companies under money laundering regulations,โ the report states.
On January 27, Cointelegraph reported that the FCA has only approved 41 out of a total of 300 crypto companies applications seeking regulatory approval, as the rules were implemented in January 2020.
Related: UK leads crypto activity in Central, Northern and Western Europe: Chainalysis
This comes after the FCA recently guidance material published to help crypto companies better understand the new cryptocurrency promotion rules that recently came into effect.
On November 2, Cointelegraph reported that the FCA published โfinalized non-manual guidanceโ for compliance with the new rules.
The new rules relate specifically to how crypto companies can promote themselves to customers.
The FCA outlined issues such as crypto companies making claims about the ease of use of cryptocurrencies without highlighting the risks involved, as well as risk warnings not being visible enough in small fonts.
Magazine: Crypto Regulation: Does SEC Chairman Gary Gensler Have the Last Word?
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