The UK’s Financial Conduct Authority (FCA) has staunchly defended its stringent approach to cryptocurrency regulation, amid growing industry criticism over what some see as excessive barriers to entry.
Val Smith, director of payments and digital assets at the FCA’s authorized department, argued that maintaining high regulatory standards is essential for protecting consumers and preserving market integrity. “Innovation that is quickly built on unsafe, unregulated, and untrusted foundations may collapse,” Smith wrote in a recent article, emphasizing that relaxed standards would undermine market functionality and user protection.
The regulator’s tough stance has led to notably low approval rates, with only four out of 35 cryptocurrency firms securing registration in the past year. However, Smith clarified that no applications face immediate rejection, stating that each company undergoes a thorough evaluation based on multiple criteria, including financial crime controls, operational environment, and target customer base.
The cryptocurrency industry has pushed back against these measures. CryptoUK, the sector’s self-regulatory trade association, highlighted on September 12 that its members find the registration process particularly challenging. A spokesperson for the organization described the application process as “a huge demand on resources, personnel and finance.”
