Crypto Exchanges Face an Uphill Battle for EU Regulatory Approval
As European regulators crack down on unlicensed crypto exchanges, getting approval is proving difficult.
Last week, for example, De Nederlandsche Bank (DNB), the Dutch central bank, announced that it had fined crypto exchange Coinbase €3.325 million (about $3.6 million). for operating in the country without a license before the company was granted a in September of last year.
The sanction follows a fine similar to that of DNB imposed on Binance in July, while the company continues to operate in the country without the necessary authorizations.
Overall, DNB has granted only a small number of authorizations, and the latest fines demonstrate the difficulties that crypto businesses face in the absence of a European passport for crypto licenses – a problem which should be resolved with the adoption of the EU’s long mandate. -expected regulation of Crypto Asset Markets (MiCA) this year.
This does not solve the problem in the UK, as companies wishing to offer their services in the country will have to obtain new approval from the Financial Conduct Authority (FCA).
And as a financial regulator revealed this month, only 41 of the 260 crypto-asset businesses that applied for registration in January were approved, representing only 15% of the total number of applications received. For the remaining 85% of companies that either withdrew their application or had it rejected, the FCA provided feedback on what it considers a “good” application.
Extend surveillance beyond anti-money laundering
As it stands, European regulatory sanctions have been administered on the basis of anti-money laundering (AML) legislation. For example, in the Netherlands, the DNB is the authority responsible for ensuring that crypto businesses comply with the relevant AML laws, while the FCA has a similar obligation in the UK.
Under the MiCA, EU regulators will have an expanded oversight mandate that will bring the majority of crypto-asset services to a regulatory standard comparable to that of the traditional financial sector, with rules in place for the protection of consumers, the prevention of tax evasion as an improved AML framework.
Meanwhile, in 2023, the UK is expected to diverges from the EU on crypto regulation.
For example, although the Financial Services and Markets Bill (FSMB), which is currently in parliament, will give the FCA greater leeway to regulate crypto businesses beyond anti-money laundering, this will be largely limited to stablecoins as the country does not yet have developed a dedicated MiCA-style legislative instrument for the sector.
That’s not to say UK policymakers haven’t expressed interest in new legislation.
In fact, as part of a broad investigation into the nation’s crypto asset sector, the Treasury Committee engaged with the FCA and key stakeholders on industry developments, including a parliamentary meeting last december on the ramifications of the FTX scandal and its effects on UK consumers.
In response, Sarah Pritchard, executive director of markets at the FCA, said the regulator is “really concerned” that consumers engaging with crypto platforms are not sufficiently aware of the risks involved.
Additionally, while the FCA issued a warning about FTX’s illegal operations in the country before its collapse, Pritchard reminded MPs present that the regulator is limited as its consumer protection mandate does not currently extend to the sector. of cryptography.
Similarly, Matthew Long, director of payments and digital assets at the FCA, noted that had the FCA been given an expanded range of powers to regulate the digital asset space, the financial watchdog would have been in a better position to repay. investors who have lost funds. in the collapse of the exchange.
“If it was in the settlement, we would have a wind-up plan where we would look at each of these people’s investments and make plans to have their repayment properly accounted for,” Long told the House committee.
For now, members of the Treasury Committee seem to have taken notice, expressing concern that the sector is currently under-regulated and that new legislation will be needed to protect consumers in the future.
For example, in a response to the FCA’s recently announced data on crypto firm application approvals, committee chair Harriet Baldwin acknowledged that a review of statistics and an ongoing investigation into crypto regulation “have not disabused us of the impression that parts of this industry are a ‘wild west’.
For all PYMNTS EMEA coverage, subscribe daily EMEA Newsletter.
PYMNTS Data: Why Consumers Are Trying Digital Wallets
A PYMNTS study, “New Payment Options: Why Consumers Are Trying Digital Wallets” reveals that 52% of US consumers have tried a new payment method in 2022, and many are choosing to try digital wallets for the first time.
#Crypto #Exchanges #Face #Uphill #Battle #Regulatory #Approval #Crypto