Global rules needed to regulate cryptocurrency, says UK watchdog

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Nikhil Rathi, CEO of the UK financial regulator the Financial Conduct Authority (FCA) has spoken publicly about the need for cryptocurrency regulation.

In a speech for the Peterson Institute for International Economics in Washington on Thursday, Rathi said that global baseline standards for crypto firms are essential. He added that the UK Government will collaborate with its US counterparts to create a regulatory framework for cryptocurrencies.

“In the past, innovative firms would have been pleading for less regulation — now they understand and appreciate that rules are there to help provide certainty,” said Rathi.

“As we have seen in other sectors like anti-money laundering, these are inherently cross-border activities by some very well organised actors, and therefore having good common regulatory standards and information sharing cross-border is fundamental to the clean markets that we all want,” he added.

The FCA announced last year that Binance, the world’s largest cryptocurrency exchange, was not allowed to engage in any regulated activity in Britain because it was not capable of being adequately monitored.

However, regulators in France, Spain, and Italy have this year given Binance permission to operate in their countries’ domestic markets.

The FCA has long warned cryptocurrency investors that they risked losing everything – a warning that came true for many with the recent crypto crash.

Since hitting a record high of $69,000 in November, the value of Bitcoin has fallen by around 70%. As of Monday, it was trading at $20,422.

The FCA lacks the authority to approve the creation of a regulatory framework for cryptocurrencies in the UK, since many of its regulations in this area relate to money laundering.

Lawmakers and regulators across the world are advocating global collaboration to address the threats and opportunities associated with cryptocurrencies and blockchain technology.

On Monday, global regulator the Financial Stability Board (FSB) announced it was working on a regulatory framework for crypto assets. It will make its recommendations to G20 finance ministers and central bank governors in October.

The FSB looks after many countries, including those within the G20.

The Board said it was dedicated to supporting ‘international consistency of regulatory and supervisory approaches amongst national authorities and international standard-setters’ as they work toward adopting risk-based, technology-neutral policy for the whole range of crypto-assets.

The FSB said the current instability in the cryptocurrency markets ‘may have spill-over effects on important parts of traditional finance such as short-term funding markets.’

In accordance with the directives outlined in an executive order published in March, the US Department of the Treasury last week sent a crypto framework for international participation to President Biden.