The U.K’s National Audit Office (NAO) has raised 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 claimed that the FCA is slow to respond and take action against illicit activities in the crypto industry.
High staff turnover rates and a lack of specialist skills increase risk to @TheFCA’s key commitments.
It has responded by recruiting and spending £317m on its change programme.
This should help it prepare financial services for the future.
More: https://t.co/U66ep8J8Sp pic.twitter.com/GtG5TAjl4t
— National Audit Office (@NAOorguk) December 8, 2023
The NAO highlighted that it took the FCA almost three years to take action against illegal operators of crypto ATMs. On July 11, Cointelegraph reported that the FCA had shut down 26 crypto ATMs as part of a coordinated investigation. In response, the NAO stated:
“While the FCA has required crypto-asset firms to comply with anti-money laundering regulations since January 2020, and began supervision work including engaging with unregistered firms, it did not begin taking enforcement action against illegal operators of crypto ATMs until February 2023.”
The NAO claims that the delay in registering crypto firms seeking regulatory approval from the FCA was attributed to the absence of specialized crypto personnel.
“For example, a shortage of crypto skills meant the FCA took longer than planned to register crypto-asset firms under money laundering regulations,” the report stated.
On Jan.27, Cointelegraph reported that the FCA had approved only 41 of the 300 crypto firm applications seeking regulatory approval since the rules were implemented in January 2020.
Related: UK tops crypto activity in Central, Northern and Western Europe: Chainalysis
This comes after the FCA recently released guidance material to help crypto firms better understand the new crypto promotion rules that came into effect in November 2023.
The new rules specifically relate to how crypto firms are allowed to promote to customers.
The FCA outlined issues such as crypto firms making claims about the ease of using crypto without highlighting the risks involved, as well as risk warnings not being visible enough in small fonts.
Magazine: Crypto regulation: Does SEC Chair Gary Gensler have the final say?