⚖️ UK FCA Proposes to Ban Unregulated Companies from Publicly Issuing Cryptocurrencies
The UK's Financial Conduct Authority (FCA) has released a discussion paper proposing various cryptocurrency regulatory measures, now seeking opinions from investors, cryptocurrency companies, industry groups, and relevant professional institutions.
The core of the proposal is to consider banning unregulated companies from publicly issuing cryptocurrencies, and the Treasury has also stated that, apart from companies that meet specific conditions, other unregulated cryptocurrency businesses will be prohibited from raising funds publicly.
This move aligns with the trend of global regulators strengthening control over unregulated securities issuances, as such issuances are often associated with fraud, investor losses, and market manipulation.
The FCA also proposed that authorized digital asset trading platforms share market abuse data to enhance transparency in the cryptocurrency sector and protect user safety. Additionally, it is seeking feedback from all parties on market access, information disclosure, and measures to combat market abuse, with a deadline of March 14, 2025.
Other European countries are also calling for global cooperation in regulating digital assets, with countries like Denmark, Italy, and the Netherlands considering implementing tax monitoring rules to align with EU tax standards.
This document is an important step for the UK in building a cryptocurrency regulatory framework, with a legislative draft expected next year and a complete regulatory framework to be achieved by 2026.
At the time of the document's release, concerns about the regulatory compliance of digital asset companies are growing, with reports indicating that approximately 90% of digital asset entities in the UK do not meet anti-money laundering standards. Regulators are worried that insufficient regulation could expose the financial system to threats from fraud and money laundering.
In October, the FCA was asked to investigate TikTok for allegedly operating an illegal cryptocurrency trading platform, highlighting the increasing vigilance of regulators in protecting financial markets.
Despite facing regulatory challenges, the adoption of virtual assets in the UK remains strong, with about 7 million adults in the UK holding digital assets.
While strengthening regulation, the FCA also faces challenges from more cryptocurrency-friendly jurisdictions, such as a renewed sense of optimism in the US after Donald Trump, a candidate supportive of cryptocurrencies, won the election.
What are your thoughts on the FCA's proposal to ban the public issuance of virtual assets?