U.K. regulator Financial Conduct Authority (FCA) recently proposed that digital currency exchanges and wallets should abide by their annual financial crime reporting obligations. The FCA made this announcement in its ‘Extension of Annual Financial Crime Reporting Obligation” consultation paper, in which it proposed that more firms should be required to report.
According to the paper, if more firms were to file a report, then:
“This additional information will allow our supervisory approach to be more data led, and broaden our understanding of firms that may have intrinsic Money Laundering (ML) risks due to their activities. [This information] will help us improve the focus and effectiveness of our approach, with risk-based supervision and better use of our supervisory tools. This means our resources are targeted at firms that carry on activities that pose potentially higher ML risks. And the approach will result in improving firms’ money laundering systems and controls, reduce actual risks of money laundering and help improve the overall integrity of the U.K. financial system.”
For some digital currency service providers, the FCA’s proposal will require them to make significant operational changes so that they can be compliant. For instance, Binance—whose operations are practically illegal—would most likely go out of business (or end up in jail) if they had to submit a financial crime report.
However, Bitcoin businesses are inherently compliant, and will not need to up-end their business operations to comply with the FCA if its proposal passes.
Bitcoin works within the law
Bitcoin transactions are private, but not anonymous. If you are writing data to the Bitcoin blockchain, then you should be acting honestly and complying with the law. If you aren’t, then the evidence of your illegal activities will live on the blockchain forever for everyone to see; this evidence is examinable and can/will be used against individuals conducting illegal activities. That being said, Bitcoin is full of compliant individuals and businesses, and anyone who isn’t is easily identifiable and is subject to face legal repercussions.
Although the FCA’s proposal has not been approved yet, Bitcoin companies have nothing to fear. The proposal is currently in the consultation phase, and stakeholders have until November 23, 2020, to leave feedback on the proposal. Afterward, regulators will decide how to move forward with the proposal given the feedback they receive.
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