Cryptocurrencies: Regulation

Treasury written question – answered on 13th June 2022.

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Photo of Adam Afriyie Adam Afriyie Conservative, Windsor

To ask the Chancellor of the Exchequer, if he will allow UK FCA regulated firms, such as brokers, to be exempt from the FCA Cryptoasset Register as they already have equivalent approved processes in place.

Photo of John Glen John Glen Minister of State (Treasury) (City), The Economic Secretary to the Treasury

Under the Money Laundering Regulations (MLRs), any firm operating as a cryptoasset exchange provider or custodian wallet provider must be registered with the FCA for anti-money laundering supervision as a cryptoasset business. It is the responsibility of the FCA, as the independent supervisor for these firms, to assess whether firms have appropriate anti-money laundering controls in place for the kinds of activity they carry out, prior to admitting them to the register. There is no statutory exemption to this requirement for firms that are already registered with the FCA for another activity.

It is necessary for firms dealing with cryptoassets to demonstrate that their controls are adequate to deal with the specific nature of the cryptoasset ecosystem. Having adequate AML controls for one type of business activity does not guarantee that these controls are suitable for another.

The government is committed to supporting the safe and sustainable growth of the cryptoasset sector. The MLRs established a risk-based approach to the supervision of cryptoasset businesses, and the assessment which each firm must undergo should therefore be proportionate to the risks generated by the kind of activities it engages in. The processes that a broker is expected to put in place will therefore likely be different from those that a large cryptoasset exchange is expected to demonstrate.

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