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UK Moves In on Crypto, What the FCA’s Plan Could Mean for the Market

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  • The UK’s Financial Conduct Authority has launched a public consultation on crypto activity, including staking and DeFi.
  • The discussion paper aims to gather feedback to help shape a new regulatory framework for digital assets.
  • The consultation follows draft legislation from the Treasury to expand FCA oversight across crypto markets.

The Financial Conduct Authority (FCA) launched a public consultation about crypto key areas such as staking, lending, and DeFi. The regulator introduced a document to establish regulatory guidelines that fit modern digital asset market trends. This public initiative includes the strategic development of an innovative, secure crypto environment in the United Kingdom.

The FCA aims to understand newly developed sectors that have evolved without receiving any official regulatory approval. The authority requests feedback from both market players and the general public to develop the upcoming regulatory requirements. The regulatory agency prioritizes market clarity and integrity in its pursuit to enable digital asset market growth.

The regulatory proposal emerged after the Treasury released its draft bill to expand FCA regulatory authority over cryptocurrency operations. Under the proposed legislative framework, the FCA will acquire authorization to monitor stablecoins, exchanges, and decentralized finance platforms. Adopting this legislation will serve as basic guidance for establishing market abuse regulations, disclosing assets, and developing exchange listing standards.

FCA Targets Staking, Lending, and Borrowing Rules

The FCA discussion paper analyzes stakeholding and crypto-based lending together. These sophisticated operations require regulatory oversight because they influence liquidity and user exposure to financial risk. The FCA examines crypto-based lending and staking operation models to find appropriate safeguards for these systems.

The document addresses difficulties regarding counterparties’ risk control and proof of ownership during staking or lending activities. The FCA wants to clarify interaction standards between service providers and their participants while defining specific obligations for these service providers. The design aims to enhance users’ security while preserving the continued system development.

The regulator needs public feedback to determine which activities need financial services regulations and identify new development standards. The FCA requires feedback from the industry to determine its implementation approach for the Financial Services and Markets Act from 2023. Comments should be submitted by May 25 before the regulator plans additional proposals for follow-up.

DeFi and Intermediaries Under Regulatory Scrutiny

The regulator’s consultation encompasses DeFi platforms with decentralized finance services and crypto intermediaries operating in that domain. The opaque infrastructure and minimal supervisory systems of these areas create additional risks. The FCA is working to determine methods for implementing regulatory measures that will stop manipulative behaviors while holding participants responsible for their actions.

The current regulatory direction aims to support consumer rights and promote safety in DeFi technological development. The regulatory authority seeks precise definitions of how control functions in decentralized platforms, as well as how governance operates and how liabilities are established. 

Government officials endorse this strategy because they intend to build up the sector through established regulatory systems and international teamwork. The FCA follows worldwide norms to position the UK as a leading digital asset center. 

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Kraken Launches Ambitious Crypto Derivatives in UK, Targets Institutions and Eligible Clients

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  • Kraken’s crypto derivatives trading opens to all eligible UK clients.
  • FCA-regulated MTF platform enables Kraken’s UK derivatives offering.
  • Kraken reports $1.5 billion revenue for 2024, explores public listing.

Kraken, a top crypto exchange, has launched a crypto derivatives trading service in the UK. The service is accessible to professional investors under the regulations of the U.K. Financial Conduct Authority(FCA). Kraken’s entry into the UK market marks a major step in the company’s expansion in institutional markets.

The product was initially accessible to select clients before recent expansion. However, Kraken has rolled out the service to all eligible clients who complete the onboarding process. Alexia Theodorou, Kraken’s Head of Derivatives, stressed the company’s dedication to derivatives market expansion across the UK market.

Crypto Derivatives Market Demand

Derivatives account for 70% to 75% of total global crypto trading volume. Kraken has witnessed increased derivative market demand especially from institutional clients. Kraken has decided to launch derivatives trading because of their high growth potential compared to spot trading.

Kraken provides multi-collateral perpetual contracts, which offers low-cost trading options for institutional clients. These products enable clients to use various forms of collateral and leverage to execute complex trading activities such as hedging and market-neutral positions. These products provide professional clients with seamless crypto trading experience.

Kraken faces licensing hurdles despite the increased global interest in crypto derivatives. The exchange has not launched its derivatives products in major markets such as South Korea, U.S and some countries in Europe due to regulatory limitations.  Theodorou states that there are clear regulations for the spot market while the derivatives markets require country-specific licenses.

Kraken’s Market Expansion and Acquisitions

Kraken’s derivatives are available on its Multilateral Trading Facility (MTF), which is operated by Crypto Facilities and regulated by the FCA. In 2019, Kraken acquired Crypto Facilities for more than $100 million. The Bermuda-based MTF platform provides access to Kraken’s futures broker services which provide a regulated environment for derivatives trading.

Kraken recently acquired NinjaTrader, a U.S.-based futures broker, and a MiFID II-regulated entity in Cyprus. These acquisitions could boost Kraken’s derivatives product diversification and market expansion across Europe and the U.S.

Kraken’s focus on crypto derivatives as part of its continuous global market expansion. Kraken, the 13th largest centralized exchange by volume, continues to expand its services. Moreover, the company has added U.S equities trading which enables  clients in select U.S states to trade more than 11,000 stocks and ETFs.

Kraken’s impressive financial performance enhances its market expansion. The company achieved $1.5 billion in revenue in 2024 as it considers going public.

BlackRock Secures FCA Approval to Launch Bitcoin ETP in UK

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  • BlackRock’s iShares Bitcoin ETP debuts with a 0.15% fee in Europe.
  • FCA registration strengthens BlackRock’s position in UK crypto market.
  • BlackRock’s Bitcoin ETP offers regulated access for European investors.

The UK Financial Conduct Authority (FCA) approved BlackRock’s registration to operate as a crypto asset firm. The registration enables BlackRock to launch its European Bitcoin exchange-traded product (ETP) in UK markets. The approval adds the company to the list of major crypto players which operate in the UK’s regulated crypto market such as Coinbase, PayPal and Revolut.

The FCA approval represents a major growth for BlackRock as it enters the UK and European cryptocurrency markets. The firm has accomplished a major achievement with its compliance with FCA’s strict registration standards. BlackRock’s success demonstrates its dedication to regulatory compliance within the digital asset market.

European Bitcoin ETP, IB1T

BlackRock has launched its European Bitcoin ETP, under the ticker IB1T,  on both Euronext Paris and Amsterdam sites. The company reduced its fee rate to 0.15% until the end of 2024 to entice potential investors. The fee will increase to 0.25% post-2024 to match the rates applied by other main Bitcoin investment products in the market.

Each share of IB1T ETP represents real Bitcoin which is held under secure custody by Coinbase. This structure allows investors to access Bitcoin markets without direct ownership of the cryptocurrency assets. The product mirrors the performance of BlackRock’s U.S-based Bitcoin Trust, which has experienced substantial growth after its launch.

BlackRock’s European Market Expansion

BlackRock’s move to enhance its Bitcoin investment options follows increased demand for regulated cryptocurrency products in Europe. This move boosts the acceptance of cryptocurrency in mainstream finance and provides institutional and retail investors access to secure Bitcoin. This move could boost market entry by traditional.financial institutions.

BlackRock’s CEO Larry Fink recently stated that Bitcoin offers protection against economic crises. His remarks concentrated on American debt issues and the potential decline in the value of the U.S dollar. He predicts that Bitcoin will acquire a status as one of the primary protective reserve assets.

BlackRock’s expansion follows recent market interest in Bitcoin investments outside of North America . The firm’s European ETP gives investors a simple and regulated exposure to Bitcoin. BlackRock decided to enter the UK market because of this increased demand for alternative assets from investors.

UK Banker Proposes ‘Tax Crypto’ to Boost Stock Market Investment

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  • Lisa Gordon urges UK to tax crypto to revive stock market growth.
  • Proposal aims to shift funds from crypto to boost local investments.
  • UK faces stock market stagnation with fewer IPOs and delistings.

Cavendish investment bank chair, Lisa Gordon has proposed cryptocurrency taxation to  drive investments into local stocks. Gordon proposes a tax shift which transfers the stamp duty from equities to crypto or reduces stamp duty on equities. The proposal aims to direct its funds towards UK businesses to propel economic growth in the country.

Gordon’s Proposal to Boost UK Economy

A 0.5% stamp duty applies to all stock purchases conducted on the London Stock Exchange in the UK. Each year this tax brings in about £3 billion for the government. Gordon proposes moving the stamp duty from equities to crypto because it would attract more citizens to buy shares from local businesses.

Gordon expressed concerns about the situation where over 50% of people under 45 years hold cryptocurrency but lack equity investments. She considers crypto as an “non-productive asset” unlike equities which provide investment capital for businesses. These businesses then generate employment opportunities and pay taxes to the government.

Gordon highlighted that equities contribute to long-term growth and economic stability. Gordon argues that an increase in local stock ownership could revitalize the British stock market. She explained how this shift would establish employment opportunities, support corporate innovation and boost fiscal contributions to the government.

Who Owns Crypto and Who Saves in The UK?

According to the Financial Conduct Authority, 7 million UK adults which represents 12% of the population own cryptocurrencies. The FCA’s November survey revealed that the majority of digital asset owners are below 45 years old. Gordon believes that many crypto holders lack investment strategies which would protect their future financial stability.

The FCA’s survey indicated that 70% of British adults owned savings accounts. However, the data reveals that only 38% of adults have direct ownership of shares or through investment accounts. This demonstrates poor performance between savings and investments especially for younger adults.

Recent data from FCA show that the rise in the cost of living has compelled many adults to decrease their investments or savings. Approximately 44% of adults had halted or reduced their investment and saving activities. Everyday expenses compelled nearly 25% adults to withdraw money from their savings or sell their investments.

Impact of Crypto Taxation to UK Stock Market

Gordon is a member of the Capital Markets Industry Taskforce that aims to revive the stock market in the UK. Her proposal aims to revitalize the market which has witnessed a decrease in new listings in recent years. A report from EY consulting firm shows that the UK experienced its least active year for initial public offerings (IPOs).

A large number of companies have chosen to either delist or transfer to US exchange platforms. EY attributes this development to factors such as decline in liquidity levels and lower valuations in the UK. However, Gordon believes that the UK offers investors a more secure environment compared to the US markets.

The digital asset market has seen a decline in its financial performance. Bitcoin’s value has declined by 11% in the last month and struggles to sustain its support above $85,000. Gordon argues that crypto-taxation would redirect investments to the stock market and boost the UK economic growth.

Kraken Gains EMI License: What It Means for UK Crypto Traders, Report

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  • Kraken has secured FCA approval to operate as an Electronic Money Institution, enabling faster deposits and withdrawals for UK users.
  • With the new license, exchange aims to form partnerships with traditional financial institutions and expand its crypto offerings in the UK.
  • Kraken’s increased presence in the UK is bolstered by partnerships with major sports brands like Williams Racing F1 and Tottenham Hotspur FC.

Kraken has recently been granted an authorization from the FCA to operate as an Electronic Money Institution (EMI). This license enables Kraken to issue the electronic money which would enable the faster and convenient deposits and withdrawal of funds from the platform to the users in United Kingdom.

Kraken’s UK Expansion Plans

The new authorization will help company in developing the sort of relationships that it has intended to establish with conventional financial institutions. It also aims to launch new services in relation to the new market in the United Kingdom. Bivu Das, the General Manager Kraken UK, noted that the demand for cryptocurrencies in the UK has been on the rise as consumers seek financial services in the emerging market. 

Cryptocurrency adoption by the public has gradually increased in the United Kingdom in the recent past. The FCA’s research revealed that there are 7.3 million adults in the country are already investing in crypto or 12% of the total population. The transformation has also extended to increased GBP trading volumes for the platform, thus providing the UK more prominence as the global market.

This comes close on the heels of Kraken ‘s approval under the EU’s Markets in Financial Instruments Directive. This permits platform to provide regulated derivatives to the European trader. With approvals from the United Kingdom and the European Union, Kraken is setting itself up to be one of the dominant cryptocurrencies that connect with classical tools for global finance.

Strategic Sports Partnerships Boost Kraken

It has also increased its coverage in the UK through strategic branding affiliations with sport clue brands. Recently, platform has entered into partnership agreements with Williams Racing F1 as well as Tottenham Hotspur FC. These affiliations also prove useful to expand company’s outreach and strengthen its brand in the UK more.

https://twitter.com/krakenfx/status/1899090339459182686

Kraken has had its operations in the United Kingdom since 2014. It was also the first exchange to list a BTC/GBP trading pair that enhance its presence in the market. Currently, this exchange offers access to more than 300 cryptocurrencies, and there are many fiat gateways available for UK customers.

As for the future development, platform is going to expand its range of both crypto and fiat offerings in the near future. These new offerings will increase the number of tools available for users in the UK to protect their digital assets. With such expansion plans, compnay is poised to increase its incorporation into the development of the country’s crypto marketplace.

Dubai Regulator VARA Crackdown On Memecoins: Issues Caution to Investors

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  • VARA urges caution against speculative, volatile memecoins.
  • Unlicensed memecoin platforms may face immediate restrictions.
  • Failure to comply with VARA rules may result in hefty fines.

Dubai’s crypto regulator VARA has warned about the dangers of memecoins, highlighting their lack of intrinsic value and high volatility. Investors must adhere to the authority’s regulations to avoid severe financial risks and penalties.

Dubai’s Cracks Down on Memecoins

Dubai’s Virtual Assets Regulatory Authority (VARA) has issued a warning to investors about the risks of memecoins. The regulator cautioned that these assets are highly speculative and unregulated. It emphasized that their prices are often manipulated and driven by social media trends and hype.

In a statement issued on February 13, VARA highlighted that memecoins are volatile and subject to market manipulation. It further noted that these cryptocurrencies lack intrinsic value and are often influenced by misleading promotional strategies. The regulator urged investors to be cautious and avoid falling for unrealistic return promises.

VARA also pointed out that the rapid collapse of these coins could lead to significant financial losses. Investors could face sudden liquidity issues, making it difficult to sell their tokens. The regulator stressed that individuals must exercise caution when engaging with these speculative assets.

VARÁ’s Regulatory Compliance

According to VARA, memecoin issuance in Dubai must comply with the authority’s regulations. This includes rules for marketing, advertising, and solicitation of digital assets. Violators could face fines of up to $135,000 for breaching these regulations, which were introduced in 2023.

The Full Market Product Regulations apply to all market participants within Dubai except those that operate under the Dubai International Financial Centre (DIFC). These regulations include strict rules on crypto marketing, ensuring that promotions do not mislead investors about the risks associated with digital asset trading. Moreover, companies must adhere to compliance confirmation procedures and provide clear disclosures in promotional material.

VARA also mentioned that it could restrict access to memecoin platforms without prior notice. Entities that engage in unauthorized virtual asset activities could face enforcement action. The regulator has advised memecoin consumers to take necessary steps to protect their financial security.

Global trends

VARA’s warning comes in the wake of growing interest in memecoins, which have seen their market capitalization reach $81.1 billion. However, these tokens carry high risks, and investors must remain aware of the dangers of trading them. The regulator emphasized that promises of large returns often signal fraudulent schemes designed to exploit investors.

Furthermore, the United Kingdom’s Financial Conduct Authority (FCA) has expressed concerns over memecoin projects. The FCA recently issued a warning about a Solana-based memecoin, Retardio. The authority warned Retardio investors that they may not be protected under the country’s financial compensation schemes.

Dubai’s growing crypto market has seen stricter regulations since the country introduced its crypto licensing requirements in 2022. The regulations also cover activities such as token issuance, digital asset custody, and crypto exchange operations. These measures ensure a more secure and regulated environment for the digital asset market.

Coinbase Obtains FCA Approval to Revolutionize UK Crypto Market

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  • Coinbase gains FCA approval to offer crypto and fiat products in the UK.
  • The UK sees increased crypto adoption as Coinbase pushes for growth.
  • Coinbase expands to Argentina, tapping into Latin America’s crypto market.

Coinbase continues to build its global presence with a significant milestone. The exchange has secured VASP registration with the UK’s FCA, enabling the company to offer both crypto and fiat products directly within the market.

Coinbase Secures VASP Registration with UK FCA

Coinbase has secured registration as a Virtual Asset Service Provider (VASP) from the UK’s Financial Conduct Authority (FCA). This move allows the exchange to expand its services in the UK market which is part of its international strategy. The company can now offer both crypto and fiat products to retail and institutional investors under FCA regulations.

This VASP registration allows the company to operate as a compliant crypto asset provider in the UK. The company is positioning itself to take advantage of a stable regulatory environment as the UK pushes forward with crypto policies. VASP registration illustrates the alignment between regulators and industry players in balancing innovation and consumer protection.

Keith Grose, Coinbase’s UK CEO, emphasized the company’s commitment to increase crypto adoption. He stated that this registration strengthens the company’s presence in the UK and supports its mission to onboard the next billion people into crypto. Grose also emphasized on the company’s focus on security, compliance, and economic freedom through cryptocurrencies.

The VASP approval comes after major developments in the crypto sector. Bitcoin reached all-time highs in 2024, and more people in the UK have invested in digital assets. The percentage of UK adults holding crypto grew from 10% to 12% which reflects increased mainstream adoption.

Coinbase Expansion in Latin America

Coinbase’s growth in international markets continues with the recent approval in Argentina. Argentina’s National Securities Commission approved the company’s registration to offer crypto services to approximately 5 million users. The company launched in Brazil in 2023 which reflects the growing crypto adoption in Latin America.

Coinbase’s expansion into Argentina further emphasizes the region’s importance in the global crypto landscape. Latin America ranks fifth in the world for crypto adoption, driven by countries like Venezuela and Argentina. The region has witnessed increased crypto activity, especially in countries facing inflation, which positions it as a major market for digital assets.

Regulatory Compliance

The company’s registration allows it to bypass third-party approval and communicate directly with the FCA. This enables the company to engage in regulatory discussions such as new rules for staking and stablecoins.

Coinbase has worked to improve its compliance measures despite scrutiny from the FCA in 2024 for onboarding high-risk customers. The company paid a fine of £3.5 million and committed to improve its compliance protocols. 

Crypto’s Future in the UK: FCA’s Powerful Plan for Regulation

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  • UK’s FCA releases a discussion paper on future crypto regulation.
  • The government will no longer pursue a phased approach to crypto legislation.
  • Focus on developing balanced market abuse and admissions regimes.

The UK’s Financial Conduct Authority (FCA) has unveiled a discussion paper outlining its strategy for regulating crypto and crypto asset public offerings (ICOs). While not yet a law, this paper sets a roadmap for the future regulatory landscape.

The Government’s Legislative Move

The UK government is taking significant steps toward establishing a regulatory framework for digital assets. After announcing plans in 2023, the government confirmed in November 2024 that it would move forward with legislation to bring digital assets under the FCA’s regulatory perimeter.

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A key departure from the old regime is that for the first time, the government will not handle regulation of stablecoins as separate from crypto trading; the two will come under the same law. It reflects a growing prominence of digital assets and its related sectors within the wider financial system.

Broader Crypto Asset Definitions and Regulatory Expansion

In 2023, the law expanded the definition of digital assets to encompass various digital assets that can be transferred, stored, or traded electronically. This includes stablecoins like Tether and Bitcoin, among others. However, security tokens, which are already regulated, fall outside this scope.

The FCA is preparing for a broader mandate than just monitoring anti-money laundering activities. Its new scope will also involve supervision over digital currency trading, regulation of stablecoins, custody, and intermediary services.

The FCA is focusing to establish the crypto market on two main regimes that it has laid down. This includes establishing the regime of Market Abuse and that of Crypto Asset Disclosures A&D regimes.

These will help ensure that the market is fair and transparent while allowing growth. The FCA desires to build a regulatory regime that takes risks seriously with due seriousness, without strangling innovation.

International Collaboration and Future Steps

Besides domestic consultation, the FCA is already working on the international side. It had been leading in developing a global regulation, including at the IOSCO Crypto and Digital Assets Recommendations. Being part of the FSB, the FCA will continue to work on securing global standards for crypto regulation.

This discussion paper invites feedback from those with involvement in the digital asset industry, both domestic and international. The FCA considers it particularly important to explore whether its proposals might result in significant alterations in current business models, whether the proposed measures are the most appropriate to prevent unwarranted risks, or if there is some type of unintended consequence to those measures.

The responses will inform the drafting of more detailed rules, and a formal consultation will follow after the laying of the necessary statutory instruments. This roadmap is a pivotal point in the approach of the UK to the regulation of crypto, making the regime more structured and secure while allowing further innovation.

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UK Fortifies Crypto Framework To Ensure Market Integrity

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In a landmark move, the United Kingdom has strengthened its legal framework to fight financial crimes in the cryptocurrency industry. The Financial Conduct Authority (FCA) which supervises the growing crypto market of the UK will soon be endowed with more authority to tackle illegal activities surrounding digital assets.

The Economic Crime and Corporate Transparency Bill, launched last year, represents the turning point of this regulatory development. It is designed to grant UK authorities power to seize Bitcoin or other crypto funds should they be suspected of being involved in criminal activities. This crucial step also fits into the general plan to preserve safety within the banking system in Britain and stop hackers from engaging in the illegal use of virtual assets.

An item of property that is, or that contains or gives access to information that is likely to assist in the seizure […] of any crypto asset, the legislation said.

UK Legislation: Balancing Crypto Innovation And Security

The latest bill is not just a law enforcement instrument; it is a guiding star for investors and participants in the crypto-economy. The legislation provides a 90-day seizure period of digital assets during criminal investigations that allows it to act as a buffer against swift movements of illegal money often associated with digital assets related crimes.

The rule will come into effect on April 26, 2024. It is also intended to discourage people from using the technology for illegal activities, as it can lead to anonymous transactions. This message is clear; United Kingdom will not accommodate crypto crimes.

These moves are not meant to kill innovation or investment but rather to keep them safe. United Kingdom is giving a head start on how to have a safe cryptoworld for real growth but it also sets a stage for stable crypto environment that can facilitate true growth and build investor’s trust again.

The UK’s proactive approach is a significant milestone in synchronizing vitality of the virtual assets market with the solidity of the traditional financial controls. It is expected to become a model for other countries as they try to strike a balance between digital currencies’ potential and security needs.

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Crypto Regulation Lags Behind Due To FCA’s Lack Of Expertise, Says UK Audit Office

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The UK’s Financial Conduct Authority (FCA) is facing criticism from the National Audit Office (NAO) for its slow and ineffective regulation of the cryptocurrency industry.

The NAO issued a report named “Financial services regulation: adapting to change” on Dece­mber 8, 2023, accusing the FCA of being sluggish and unresponsive to the emerging risks and challenges posed by digital assets.

The report pointed out that the FCA took nearly three years to enforce action against illegal crypto ATM operators, which allow users to buy and sell digital currencies with cash. The FCA shut down 26 crypto ATMs in July 2023 as part of a coordinated investigation with other agencies.

While the FCA has required crypto-asset firms to comply with anti-money laundering regulations since January 2020, and began supervision work including engaging with unregistered firms, it did not begin taking enforcement action against illegal operators of crypto ATMs until February 2023, the NAO stated.

FCA Lacks Crypto Skills And Resources

The report also blamed the FCA’s delay in registering crypto firms under money laundering regulations on the lack of crypto skills and resources within the regulator. The FCA has only approved 41 out of the 300 digital asset firm applications that have applied for regulatory approval since January 2020.

According to the report, a deficiency in expertise related to digital currencies resulted in a delay for the FCA to register firms dealing with these assets under money laundering regulations.

The report acknowledged that the FCA had taken some steps to improve its digital asset regulation, such as releasing a “finalized non-handbook guidance” for digital asset firms to comply with the new crypto promotion rules that came into effect.

The new rules aim to prevent digital asset firms from misleading customers about the benefits and risks of using digital currencies and require them to display clear and prominent risk warnings.

The report concluded that the FCA needs to adapt to the changing digital asset landscape and enhance its capacity and capability to regulate the industry effectively and efficiently.

The report also urged the FCA to be more proactive and agile in responding to the evolving virtual currencies market and technology and to engage with the public and the industry to raise awareness and understanding of digital assets.

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