Recently, the UK Financial Conduct Authority (FCA) made an announcement regarding its intention to recover approximately $8 million in costs associated with supervising stablecoins and cryptocurrency. The funds will be obtained through fees imposed on stablecoin issuers and digital asset custodians. This initiative aims to recover £6.2 million for new stablecoin regulations and a wider regime, as well as an additional £0.2 million for extending the financial promotions perimeter.
The FCA’s cost recovery plan falls under the “cryptoasset” category and is part of the agency’s 12-month business plan, which outlines various regulatory objectives for the UK market. In addition to overseeing stablecoins and digital assets, the FCA plans to implement a proportionate market abuse regime for cryptocurrencies and continue regulating crypto financial promotions. These efforts are part of a broader business plan that includes regulations for digital markets and assessments of AI’s impact on financial markets.
The FCA’s current cost recovery plan is based on previous developments in the regulatory landscape. The costs associated with new regulations seem to stem from the FCA’s pursuit of stablecoin regulations that began in November 2023. Additionally, the upcoming market abuse regime for digital assets builds upon rules implemented in 2016 to address insider dealing, unlawful disclosure, and market manipulation. While these rules were not initially aimed at the crypto sector, the UK has been contemplating extending them to include cryptocurrencies since at least February 2023.
The FCA’s existing financial promotions regime, which was extended to cover the crypto sector in October 2023, has posed compliance challenges for some crypto firms operating in the UK. As a result, several companies have chosen to withdraw from the market, and others have been placed on a warning list by the regulatory authority. These developments underscore the challenges and uncertainties faced by crypto businesses in the UK as they navigate a rapidly evolving regulatory landscape.
The FCA’s plans to recover costs from crypto regulation reflect the agency’s commitment to ensuring the transparency and integrity of the financial markets. By imposing fees on stablecoin issuers and digital asset custodians, the FCA aims to cover the expenses associated with supervising the crypto sector. However, the impact of these measures on crypto firms and the broader market remains to be seen as regulatory developments continue to unfold.