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According to a Financial Conduct Authority (FCA) executive, UK financial authorities aim to benefit from the best of traditional finance (TradFi) and decentralized finance (DeFi) when regulating cryptocurrencies like Bitcoin. The cryptocurrency community and regulators have long considered the best approach to regulate the crypto market, with ongoing concerns about over-regulation or insufficient regulation.
UK Focuses on Legal Regulations
According to FCA’s Director of Payments and Crypto Assets, Matthew Long, the right way to regulate the industry is to combine different approaches and see which yields the best outcome. Long made these remarks during a panel discussion at the FT Crypto Assets Summit on May 8:
“What we are trying to do is take the best of traditional finance and understand the structure of the system we have.”
“The simplest and clearest answer is that they are trying to benefit from traditional finance in the best way possible, meaning the same risk, the same regulation, and not reinventing the wheel. However, we must and definitely will respond to the differences in cross-border globalization. So, to be honest, there’s a bit of both.”
Long noted that there were many things he thought were relatively simple, but ultimately they were not, and there were also things that were expected to face a lot of opposition but eventually worked out.
FCA and the Crypto Space
During the panel, the FCA executive also discussed the damages in both centralized finance (CeFi) and DeFi, highlighting that many authorities worldwide have tools to combat money laundering in CeFi. According to Long, the FCA is exploring opportunities to keep good actors in the industry while making the crypto industry cleaner, safer, and better. In recent years, the UK has become a significant player in the crypto economy, attracting considerable interest from the Financial Conduct Authority (FCA).
In August 2023, the FCA reported that the authority had approved the registrations of 38 crypto firms out of a total of 300 applications since 2020. The FCA is also actively working to enhance its capabilities to detect and combat the misuse of the crypto market and prevent the industry from publishing illegal crypto advertisements.
