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The Financial Conduct Authority (FCA) of the UK has put forward new stringent regulations for cryptocurrencies aimed at mitigating risks within the digital asset sector.
A recent discussion paper published on December 16 indicates that the financial regulator intends to prohibit public crypto offerings by entities that are not regulated.
The UK’s Financial Conduct Authority (FCA) has issued a discussion paper (not legislation!), outlining a regulatory framework for cryptocurrencies and providing initial guidance on how the FCA may oversee crypto and crypto asset public offerings (ICOs).
A brief summary, link to the paper & concise analysis belowpic.twitter.com/8awdyTB2vZ
— Andre Omietanski (@punk6052) December 16, 2024
UK Proposes Public Dialogue on Cryptocurrencies
The FCA’s suggested limitations are aimed at safeguarding consumers and ensuring that promotions related to cryptocurrencies adhere to financial regulations.
The FCA is seeking input from the public and the crypto industry regarding its newly suggested regulations. The consultation period is open until March 2025. These measures are part of a larger initiative to establish a comprehensive regulatory framework for cryptocurrencies by 2026.
To combat market abuse, the FCA has recommended that authorized firms exchange information and enforce rigorous controls to identify suspicious activities.
“We are also proposing that certain firms, such as authorized crypto trading platforms, share information with one another to help prevent suspected market abuse.”
FCA Statement
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The regulator has also taken steps against platforms operating without the necessary authorization. On December 3, the FCA limited access to Pump.fun, cautioning that the platform may provide financial services without approval and could pose significant risks to users in the UK.
Current Crypto Legislation in the UK
The forthcoming legislation builds upon the FCA’s previous rules established in 2023, which barred unregistered crypto entities from advertising or promoting their services to UK residents.
Since 2020, the FCA has been actively overseeing compliance with anti-money laundering regulations within the crypto industry.
In addition to the FCA’s warning, a recent report pointed out that the UK ranks among the leading countries for crypto scams and unsuccessful projects, representing 7% of global crypto scams from January 2022 to October 2024.
This report emphasized that the rapid growth of the market in areas like the UK frequently creates opportunities for fraudulent activities, highlighting the necessity of stringent regulatory measures to safeguard investors.
The UK government considers these new crypto regulations vital for fostering a safer environment for investors. According to the FCA, these regulations aim to “outline proposals for firms to implement robust controls that prevent harm.”
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