UK FCA Seeks to Recover $8 Million for Crypto Regulation

The UK Financial Conduct Authority (FCA) has announced its intention to recover approximately $8 million in costs associated with supervising stablecoins and crypto. This decision, revealed in a March 19 release, will involve imposing fees on stablecoin issuers and digital asset custodians.

Of the total amount to be recovered, £6.2 million ($7.9 million) is linked to new stablecoin regulations and a broader regulatory framework. An additional £0.2 million ($254,400) will cover the extension of the financial promotions perimeter. These costs fall under the plan's "cryptoasset" category.

The funds recovered will contribute to the FCA's annual funding requirement of £755 million ($960 million).

This recovery effort is part of the agency's 12-month business plan, which outlines various regulatory objectives for the UK market. Among these objectives is the establishment of a proportionate market abuse regime for digital assets, building upon earlier regulations. The FCA will also continue to enforce its crypto financial promotions regime.

The FCA's broader business plan includes regulations for digital markets and an assessment of AI's impact on markets.

Contextualizing the FCA's Plans To understand the FCA's current plans, it's helpful to consider earlier developments. The costs associated with new regulations appear to stem from the FCA's focus on stablecoin regulations since November 2023.

The upcoming market abuse regime extends existing rules that were implemented in 2016. While initially targeted at insider dealing, unlawful disclosure, and market manipulation, these rules are now being adapted for the crypto sector, a consideration that has been ongoing since at least February 2023.

The FCA's financial promotions regime, which was extended to the crypto sector in October 2023, has posed compliance challenges for some crypto firms. As a result, several firms have exited the UK market, while others have been added to a warning list.