Industry Updates

FCA to make 15 hires to power crypto regulation catch-up – reports

The regular banned UK retail access to crypto ETNs in 2021

Jamie Gordon


The Financial Conduct Authority (FCA) is currently recruiting for 15 roles to build-out its crypto expertise as it shifts from fact-finding to regulating in the digital asset space.

The FCA commenced the new job listings on its website from the end of last month, with roles ranging from policy specialists to data analysts of all levels of seniority, Financial News reported.

The regulator also invited crypto industry participants to attend a ‘crypto sprint’ to educate its staff on how the sector works. The FCA is yet to name a permanent director for its digital assets arm.

The move to bolster its expertise in the space follows a European Commission vote on 10 October to pass the Markets in Crypto Assets (MiCA) regulation.

Arvin Abraham, partner at law firm McDermott Will & Emery, said: “MiCA represents the first comprehensive and harmonised regulation of crypto assets by a large group of states and establishes needed guidelines to protect consumers.”

In the summer, the EU also finalised its Distributed Ledger Technology (DLT) Pilot regime, allowing eligible firms to operate DLT-based trading facilities or settlement systems within a regulatory sandbox, according to the law firm Linklaters.

Elsewhere, previously slow-moving regulators have begun shifting their stance on wrapping crypto assets within an exchange-traded structure, as seen with Securities and Exchange Commission (SEC) greenlighting the first US bitcoin ETF last October and Australia welcoming its first crypto ETFs in May this year.

This is in stark contrast to the FCA’s decision to ban retail investor access to crypto exchange-traded notes (ETNs) from January 2021 after stating “if consumers invest in these types of products, they should be prepared to lose all their money”.

In 2019, Christopher Woolard, executive director of strategy and competition at the FCA, said: “Most consumers cannot reliably value derivatives based on unregulated crypto assets. Prices are extremely volatile and as we have seen globally, financial crime in crypto assets markets can lead to sudden and unexpected losses.

“It is therefore clear to us that these derivatives and exchange-traded notes are unsuitable investments for retail consumers.” 

Three years on, the FCA’s recruitment drive could be a sign the watchdog is rushing to make up ground on more proactive regulators, especially as incoming Prime Minister Rushi Sunak laid out plans in April to make the UK a ‘crypto hub’ for digital asset innovation. 

Bradley Duke, co-founder and CEO at ETC Group, previously warned the FCA’s stance on crypto and crypto ETPs could mean “hundreds if not thousands” of jobs will go to Germany, Switzerland, Sweden or the Netherlands, rather than the UK. 

This has already played out over the past two years as issuers flocked to launch products in these countries while Luxembourg started allowing companies to manage funds invested in crypto and Guernsey created the first bitcoin ‘ETF’ workaround structure.

However, those hoping the FCA will go from full-blown scepticism to acceptance may have misplaced hopes. 

Following the crash of terraUSD crash in May, the International Monetary Fund (IMF) said “spill-overs to the broader financial system had been limited so far”, however, the Bank for International Settlements (BIS) soon warned crypto assets have “deeper structural inadequacies”.

As with ESG, the UK is hanging onto the EU’s coattails when it comes to regulating nascent investment areas. Investors will have to wait until the FCA has built out its crypto expertise to see whether it will bring digital assets within its regulatory umbrella.

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