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UK Financial Watchdog’s Plan Includes Crypto & Big Tech

 |  April 7, 2022

The UK Financial Conduct Authority (FCA) revealed on Thursday a three-year strategy plan that will enable the regulator to stop firms that don’t meet their standards from entering in the U.K. markets and “improve outcomes for consumers.” 

The strategy plan focuses on three broad areas: reducing and preventing serious harm, for instance by tackling frauds and scams; setting and testing higher standards, for example by increasing anti-money laundering (AML) requirements and promoting competition. For the first time, the regulator will also be held accountable for delivering results, and it will publish performance metrics to measure its success. 

“Whether it’s tackling unreasonable terms and conditions, increasing customer satisfaction levels, combatting scams, cleaning up our markets or improving diversity, this strategy supports positive metrics that we are accountable for,” said Nikhil Rathi, chief executive. 

The plan contains a number of proposals for the next three years, but there are a few areas where the regulator has already started to take action. 

Crypto: From the beginning, the regulator maintains that even if these products are unregulated, the FCA should be prepared to minimize consumer harm and to ensure that companies meet the necessary standards to operate. The regulator will continue strengthening the rules that firms must meet before they can approve financial promotions, and it may ban incentives to invest in certain products. The regulator also believes that “warning consumers will go far enough to protect them,” and it is consulting “on changes to limit which consumers can respond to crypto assets promotions to certain categories.” The FCA will also work with the government to develop a new regulatory framework for crypto assets, particularly stablecoins. 

Big Tech in finance: According to the FCA, “the digitalization of financial services is changing the way consumers make decisions and markets operate,” and the regulator wants to have a regulatory framework that “unlocks the benefits of competition in digital markets.” The FCA will work together with the Competition and Markets Authority (CMA) on the new regime for companies with “Strategic Market Status.” These are companies that control access to certain markets, but generally refers to some of the Big Tech firms. The FCA wants to identify the competition risks and benefits from Big Tech entry in financial services to design the future legal framework. 

The FCA called for greater powers to govern the online promotion of cryptoassets in September last year to combat a flood of “problematic content” that accompanied the most recent surge in crypto assets’ popularity, which has created a new and complex market for regulators around the world to police.

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