When it comes to regulating cryptocurrencies like Bitcoin (BTC), financial authorities in the United Kingdom aim to take the best of traditional finance (TradFi) and decentralized finance (DeFi), according to an executive at the Financial Conduct Authority (FCA).
The cryptocurrency community and regulators have been long considering the best approach to regulating the crypto market, raising concerns about over-regulating or under-regulating it.
According to FCA director of payments and digital assets Matthew Long, the right way to regulate the industry is to combine different approaches and see which one works best.
“What we’re trying to do is take the best of traditional finance and understand the nuance of the system that we’ve got,” Long said at a panel discussion at the FT Crypto and Digital Assets Summit on May 8.
FCA director of payments and digital assets, Matthew Long (left), and Digital Asset co-founder Yuval Rooz. Source: FT Live“The simplest and most straightforward answer is that they [FCA] are trying to take the best of traditional finance, so it’s the same risk, same regulation and not reinvent the wheel,” the FCA director of digital assets noted, adding:
“But we must and we absolutely must respond to the differences in cross border globalization otherwise. So to be frank, it’s a bit of both.”Long mentioned he has seen many things that the FCA thought were relatively straightforward and eventually are “definitely not.” And on the other hand, there are things that were expected to face a lot of opposition, but it eventually worked.
FT Crypto and Digital Assets Summit’s panel on regulating crypto and digital assets. Source: cryptodirectoriesDuring the panel, the FCA executive also mentioned harm in both centralized finance (CeFi) and DeFi, stressing that many authorities around the world already have tools to challenge money laundering in CeFi.
According to Long, the FCA is exploring opportunities to keep good actors in the crypto industry while making it “cleaner, safer and better.”
Related: Revolut debuts dedicated crypto exchange for UK users
In recent years, the U.K. has become a significant player in the crypto economy, attracting considerable attention from the Financial Conduct Authority (FCA).
In August 2023, the FCA reported that the authority had approved the registrations of 38 crypto firms since 2020, out of a total of 300 applications.
The FCA has also been actively working on increasing its capabilities in detecting and combating crypto market abuse and preventing the industry from placing illegal crypto ads.
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