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UK financial watchdog calls for collaboration with digital currency firms

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The U.K.’s Financial Conduct Authority (FCA) has called on digital currency service providers in the country to collaborate with regulators in the quest for a robust legal framework for the industry.

The FCA’s stance was disclosed by its executive director Sarah Pritchard in her keynote address at the City Week conference in London. Pritchard described the growing industry as “unchartered territory” for industry participants, making cooperation with regulators indispensable.

“Let’s work together, to shape our rules and regulations to benefit markets, consumers and firms as crypto goes from niche to mainstream,” Pritchard said. “We want [the] industry’s input to make sure we get the future regulatory regime for cryptoassets right.”

The meteoric growth of the industry has seen it rise from a “symbol of alternative rebellion” to becoming “more widespread,” according to the executive director. She also noted that firms could reap the rewards of participating early in the regulatory process as it prepares them “when regulations come into force.”

Presently, the U.K. is seeking public comments on several proposed regulations, including one to govern stablecoins and another for an overarching framework. Service providers are urged to share their comments with regulators on the issuance, custody, trading, and lending of digital assets.

Apart from merely making calls for increased collaborations, the FSC revealed that it had opened the window for digital currency service providers to apply for regulations in line with the country’s money laundering regulations.

“Of the applications we have determined, nearly three quarters—195—were either refused or withdrew their application,” Pritchard said. “Yet we’ve supported firms to meet the right standards, and have registered 41 crypto firms of all sizes, showing these standards are achievable.”

Interagency collaborations

The FCA has been pushing for synergy between law enforcement and other regulatory agencies to monitor the digital currency industry. Pritchard noted that over the last 12 months, the FCA had conducted joint raids with the West Yorkshire and Metropolitan Police, resulting in the bust of digital currency scam syndicates.

The FCA and the Advertising Standards Authority (ASA) have issued joint statements urging firms to comply with advertising regulations or risk grave sanctions. At the start of the month, a guideline for celebrities and influencers was released to guide paid advertisements, with both agencies collaborating with Love Island reality star Sharron Gaffka.

“Don’t suggests to your followers that cryptoassets would be an easy investment decision or create any sense of urgency or FOMO,” the guideline read.

Watch: Head of Unit, Digital Innovation and Blockchain at DG Connect, European Commission Pēteris Zilgalvis on Bitcoin Association’s Blockchain Policy Matters

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