FCA Compels Crypto Exchanges to Share Financial Crime Information 
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FCA Compels Crypto Exchanges to Share Financial Crime Information 

April 1, 2021      Deepshikha Gupta

The UK’s financial watchdog Financial Conduct Authority (FCA) has now mandated that crypto exchanges should share their annual financial crime information with it.

According to a policy statement published, the Financial Conduct Authority pressed ahead with its previous plans to bring the so-called ‘crypto-asset businesses’ under additional documenting requirements.

FCA Covers Crypto Exchanges and Custodial Wallets

According to the new reporting obligations, both custodial wallet providers and trading platforms are expected to abide by the new rules. Apart from this, the electronic money institutions and multilateral trading facilities are among the categories of firms that also became subject to the new rules set out by the UK financial watchdog.

The FCA also outlines that revenue thresholds are not the basis to define the firms required to submit the annual financial crime report. Irrespective of the total annual revenue, the addressed firms are those that “hold client money or assets.” Or carry on an activity that the FCA considers posing higher money laundering risk.

Since 2016, the annual financial crime reporting obligation (REP-CRIM) assemblage information that assists the UK regulators in monitoring trends in financial crime. 

Many Crypto Firms Closed Their UK Operations 

According to the regulators “REP-CRIM provides us information on a range of indicators that reflect the potential money laundering risks of firms based on their regulated activity and helps us to supervise firms. In our 2020/21 Business Plan, we said we would consider extending the REP-CRIM reporting obligation to more firms.”

Soon after the applications of the final rules, most of the crypto businesses have shuttered their operations in the United Kingdom. Banning derivatives that allow investors to take a view on the direction of the price of crypto assets. The ban affects CFDs, options, and futures, as well as Exchange-Traded Notes (ETNs) that relate to unregulated crypto assets.

According to the FCA estimates the prohibition would save investors £53 million ($69 million) a year in losses. But this would not force them to liquidate their existing trades. For the watchdogs, these products are ‘ill-suited to retail consumers’ who cannot assess the risks of derivatives or ETNs that reference certain crypto-assets.

Concerning investor protection, the authorities said that 

“Even companies that sell regulated investments with an underlying cryptocurrency element will need FCA authorization to do so depending on their activities.”

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#Cryptocurrency Exchanges #Exchange-Traded Notes (ETNs) #Financial Conduct Authority (FCA) #REP-CRIM
Deepshikha Gupta
Deepshikha Gupta

A student from a technical background, Deepshikha found Bitcoin in 2020 and has been an evangelist ever since. A B.Tech turned into a full-time crypto-writer, she tries to bridge the gap that currently exists between the crypto world and people from non-technical backgrounds, through her simplistic yet effective form of writing. She finds that her writing for cryptocurrencies can redefine the way the audience interacts with the crypto space.