The UK Financial Conduct Authority (FCA) recently announced its intention to recover the equivalent of $8 million in costs associated with the supervision of stablecoins and crypto. This monetary recovery will be achieved through the imposition of fees on stablecoin issuers and digital asset custodians. The main objective is to recover £6.2 million ($7.9 million) related to the implementation of new stablecoin regulations and a broader regulatory framework. Additional funds of £0.2 million ($254,400) will be recovered for extending the financial promotions perimeter. Both of these amounts fall under the umbrella of the FCA’s “cryptoasset” category, bringing the total costs to be recovered to £6.4 million ($8.1 million).
Contribution to the FCA’s Annual Funding Requirement
The recovered funds will play a crucial role in meeting the FCA’s annual funding requirement of £755 million ($960 million). This strategic cost recovery initiative is highlighted in the agency’s 12-month business plan, which outlines various regulatory objectives for the UK financial market. In addition to overseeing stablecoins and crypto, the FCA aims to establish a proportionate market abuse regime for digital assets and maintain its existing crypto financial promotions regime.
The FCA’s broader business plan encompasses a wide range of regulatory initiatives beyond the realm of crypto. It includes provisions to regulate digital markets and evaluate the impact of artificial intelligence (AI) on financial markets. Previous developments have set the stage for some of the FCA’s current plans, as evidenced by the introduction of new stablecoin regulations in November 2023 and the expansion of market abuse rules dating back to 2016. While the initial set of rules did not target the crypto sector specifically, the FCA has been contemplating their extension to cryptocurrencies since February 2023.
The FCA’s implementation of the financial promotions regime for the crypto sector in October 2023 has posed compliance challenges for some firms, leading to their withdrawal from the UK market. Furthermore, several crypto businesses have been placed on a warning list as the regulatory landscape continues to evolve. Despite these challenges, the FCA remains committed to ensuring a safe and transparent environment for digital assets in the UK financial market.
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