Ashley Alder, the new chair of the FCA, spoke about the need for the crypto legislation to match the rigor of traditional finance. The new financial services laws, which will be implemented this year, will include these new regulatory standards.
Protection for Consumers in the Crypto Industry
The collapse of FTX and numerous bankruptcies in the crypto industry in 2022 has led countries to focus on regulation. The UK is taking this a step further by regulating crypto under a strict financial services law to mirror the strictness of traditional finance.
FCA Chair Ashley Alder stated, "The interesting aspect is the degree to which crypto will need to adapt and effectively detoxify to fit into that regime." He also noted that the new regulations, similar to those in traditional finance, will force crypto business models to change significantly.
Tough Compliance Standards for Crypto Firms
Currently, 85% of crypto firms that have applied for operation permission in the UK have been denied due to the FCA's compliance standards. The regulator has noted that some firms were evasive, had conflicts of interest, and lacked proper safeguards. Implementing these new financial services laws will establish a unified regulatory standard, providing a clear path for companies willing to comply.