The UK’s Financial Conduct Authority (FCA) is facing criticism from the country’s National Audit Office (NAO) for its sluggish approach to enforcing crypto laws and a shortage of staff with expertise in cryptocurrencies.
In a recent report published by the NAO, an independent entity responsible for scrutinizing public spending, it highlighted the potential impact of crypto-assets as an area of uncertainty that could hinder the FCA’s regulatory effectiveness.
While the FCA mandated compliance with anti-money laundering regulations for digital asset firms in January 2020 and began engaging with unregistered firms, it did not initiate enforcement actions against illegal operators of crypto ATMs until February 2023. The report raises concerns about the FCA’s ability to address risks effectively within the crypto sector.
New Hires And Focus On Crypto Expertise
As reported, the FCA has been implementing significant changes in its data management practices to identify risks more efficiently. However, the report indicates that these efforts are expected to take years, with identified data risks not anticipated to be mitigated before 2025.
Furthermore, staff turnover, including at senior levels, has been a persistent issue for the FCA in recent years. Although turnover rates have decreased, specialist areas still face delivery risks due to high turnover. The report further states:
The FCA has experienced high staff turnover, including at senior levels, in recent years. While turnover for the FCA as a whole has now fallen, delivery risks remain high in some specialist areas.
To address this, the FCA has recruited and trained over 2,000 new staff members, including seven out of 11 senior officials who joined since September 2020. The FCA recognizes the importance of maintaining specialist skills and expertise, as a shortage of crypto-savvy staff contributed to delays in registering crypto-asset firms under money laundering regulations.
Significant Crackdown On Illicit Crypto Activity
In addition, the FCA is actively enhancing its international engagement efforts to manage its influence on global developments strategically.
Recognizing the significance of international collaboration, the FCA has established a new international steering committee to provide cross-organizational oversight and support. The report notes that the FCA collaborates with other organizations to address common issues across various sectors, including the digital economy and financial services.
Ultimately, the FCA has reportedly been in charge of over 1,400 illegal digital asset activity cases between January 2020 and June 2023. It also received over 13,350 scam reports between 2020 and the first half of 2022 while supervising 50,000 firms across the UK.
The global cryptocurrency market continues its remarkable growth trajectory as it currently stands at a staggering market cap of $1.59 trillion, according to data from CoinGecko.
This represents a 3% change in the last 24 hours and an impressive 90.23% change compared to the market cap recorded one year ago.
Featured image from Shutterstock, chart from TradingView.com