Overview
Both the U.S. Securities and Exchange Commission (the “SEC”) and the UK Financial Conduct Authority (the “FCA”) have indicated the need for greater regulation in the crypto space.
Gary Gensler, the chair of the SEC has warned that cryptocurrency trading platforms must be regulated if they are to survive the test of time. Gensler stated that if the crypto market is to survive the next 5 to 10 years, it will need to be brought inside a public policy framework to give the platforms what finance is fundamentally about: credibility and trust.
Mirroring these comments, Charles Randell, the Chair of the FCA outlined that UK consumers need to be better protected from dubious crypto investments. Mr. Randell highlighted that such efforts usually arise from social media outlets and influencers who are routinely paid by scammers to help them “pump and dump” new tokens purely on the back of speculation. These comments come in the light of the UK Treasury considering proposals whereby the FCA will take a larger role in controlling the promotion of crypto assets.
With both the SEC and FCA aligned in their opinions that joint action is needed from leading regulators, a tougher regime looks just around the corner to act against “businesses which choose not to bring themselves within the reach of an effective national regulator.”
The future?
The comments by the chairs of the FCA and SEC mean that we are likely to see the FCA and SEC taking a more aggressive approach by actively encouraging and calling for regulation if crypto firms are not willing to join the registers.
This comes as the FCA is striving to exert its control over the sector by registering crypto asset firms in the UK. Whilst we can look to Coinpass as a recent example of a crypto asset firm becoming regulated earlier this month, according to Jeff Hancock (Co-Founder and CEO at Coinpass), the application was submitted in January 2020. The long delay in new registrations is preventing new crypto businesses from joining the registers and from commencing operations in the UK.
Rosenblatt can help
The regulatory regime which applies to crypto assets is complex and dynamic. A thorough understanding is needed to minimise the risk businesses face in this space.
Rosenblatt’s tech team advises on all aspects of crypto assets and regulatory law. We can help successfully navigate companies through obtaining the necessary registrations/authorisations from the FAC for their operations. We can also work with you to provide the required AML and other policies needed to support your application to the FCA.
The Rosenblatt dispute resolution team helps corporates, entrepreneurs, and individuals, across multiple jurisdictions and sectors to achieve their best outcome. We provide pre-emptive advice, advise on negotiations, taking injunctive action and undertaking investigations. We act in litigation, arbitration and tribunals, advise on alternative dispute resolution and in regulatory or white collar criminal proceedings.
We also have a wealth of experience in capital markets, acting for issuers, brokers, nomads, and other corporate advisers, across diverse sectors and we collaborate closely with institutions, large and small companies (both public and private), start-ups, scale-ups and individual entrepreneurs.
Contact us
Should you have any questions or wish to discuss any issues raised in this article, please get in touch with your usual contact at Rosenblatt, or the authors named below.
Authors
Laura Clatworthy, Partner (Laura.Clatworthy@rosenblatt.co.uk)
James Bateman, Trainee Solicitor
We at RBG Holdings/Rosenblatt support and encourage free/independent thinking in relation to issues which are sometimes considered to be controversial subject matters. However, the views and opinions of the authors of articles published on our website/s do not necessarily reflect the opinions, views, practices, and policies of RBG Holdings/Rosenblatt.
