Key Insights
- The UK’s FCA will boost surveillance capabilities to detect crypto market abuse and manipulation
- The watchdog plans to develop a new, dedicated regulatory regime tailored for policing market misconduct in crypto assets
- Improved systems, advanced analytics and consumer education campaigns are planned to tackle crypto market integrity issues
LONDON (MarketsXplora) – Britain’s financial regulator will ramp up its capabilities to monitor and act against cryptocurrency market manipulation over the next year while also developing a dedicated regime for policing abuse in digital assets, it said on Tuesday.
In its annual business plans for 2024-25, the Financial Conduct Authority (FCA) listed cracking down on crypto market misconduct as a priority, pledging improved surveillance systems and advanced analytics to identify bad actors.
“We will improve monitoring and intervention systems to cover market abuse and integrity,” the FCA said, adding it would build expertise in areas like network analysis and visualising manipulative trading patterns across asset classes.
The watchdog is aiming to bolster market integrity in the relatively unregulated crypto sector after a string of scandals, including the high-profile collapse of major exchange FTX which sparked a global regulatory reckoning.
In the UK, the FCA is developing a “proportionate market abuse regime” tailored specifically to crypto assets as it prepares for wider regulation of the industry.
This includes oversight of the country’s test investment trading facility PISCES, one of the first regulated environments for trading crypto derivatives like futures and options.
“We will assist in delivering a proportionate market abuse regime for Crypto Assets and the PISCES facility,” the FCA said.
However, Britain’s finance ministry is still finalising rules on extending traditional financial market regulations to crypto exchanges, trading venues and lending platforms.
The FCA acknowledged industry concerns about stifling innovation and said its new regime would balance fostering digital asset development while “supporting innovation to lower industry costs”.
As well as pursuing new crypto regulations, the FCA said it will step up enforcement over the “financial promotions” or advertisements issued by crypto firms to safeguard consumers from potential scams and misleading marketing.
Read also! FCA Warns Crypto Firms: Comply with Ad Rules or Face Restrictions
The regulator has already taken action over misleading crypto ads, issuing 450 alerts for illegal promotions in 2023, but said it will boost technical capabilities to crack down on improper marketing.
Meanwhile, a new consumer awareness campaign is planned to help educate investors over the risks of crypto assets and investment scams.
The FCA’s increased focus on crypto reflects growing global efforts by watchdogs to extend their remits into virtual asset trading and investing, which has boomed in recent years into a multi-trillion dollar market outside most jurisdictions’ regulatory oversight.