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The United Kingdom treasury has released a consultation paper on proposed changes to money laundering regulations that would impact the regulation of crypto assets. These changes are part of a broader review of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs) conducted in 2022. The main goal of these changes is to implement “smarter regulation” by reducing regulatory burden, ensuring regulations are a last resort, and creating a well-functioning landscape of responsive and accountable regulators.
The consultation paper highlights the importance of a robust supervisory regime to complement the effectiveness of the MLRs in regulating crypto asset service providers. As of now, most crypto firms are not supervised by the Financial Conduct Authority (FCA) and are subject to MLRs. The proposed changes would require MLRs-regulated institutions to also seek FCA regulation, while no longer needing MLRs authorization.
Under the current regulatory framework, crypto assets fall under FCA control if they are involved in regulated activities or financial instruments. The proposed changes would extend the reach of the FCA to new activities such as operating a crypto asset exchange and custody. Crypto assets not under FCA oversight would need to register with the FCA for MLRs supervision.
The consultation paper also addresses discrepancies between MLRs and the Financial Services and Markets Act 2000 (FSMA) in terms of control standards. It raises the question of whether to maintain two separate standards of control or align MLRs requirements more closely with FSMA.
In light of these proposed changes, the crypto industry faces evolving regulatory dynamics that aim to enhance oversight and accountability. Stay informed about the latest developments in the cryptocurrency sector on Global Crypto News.
