Crypto firms like FTX are "deliberately evasive," the incoming chair of the U.K. Financial Conduct Authority (FCA), Ashley Alder, told the Parliament's Treasury Committee in a meeting on Wednesday.
Alder told the committee that he will be starting with the U.K. financial regulator on Feb. 20. Alder is currently the CEO of Hong Kong’s Securities and Futures Commission (SFC). When he starts at the FCA, he will work alongside FCA CEO Nikhil Rathi and will ensure that the FCA's strategy is formulated clearly and well understood, its website said. He will also be able to challenge Rathi on how the FCA is run.
"They [crypto firms] are a method by which money laundering happens at size," Alder said.
Crypto firms have been facing increased scrutiny lately following the collapse of crypto exchange FTX, which was the third-largest exchange at one point. Even Binance, which is currently the biggest exchange with a volume of over $7 billion according to CoinGecko data, is being investigated for alleged money laundering violations and could face criminal charges.
The FCA is currently registering crypto companies so that they can operate in the country and comply with its anti-money laundering rules. the regulator hopes to get more powers to regulate the crypto sector and ensure consumers are protected once the Financial Services and Markets Bill passes but currently warns people that they should be prepared to lose all their money when investing in crypto.
“We expect all authorized and registered firms to have appropriate systems and controls to counter the risk of being misused for financial crime. We have seen too many financial crime red flags missed by the crypto asset businesses seeking registration with us for anti-money laundering and counter terrorist financing purposes," an FCA spokesperson said to clarify its current stance on crypto. "We work with crypto firms to help them understand our expectations, and if they can meet the conditions for registration, we will register them. Forty crypto firms have gained registration and shows these standards are achievable.”
Hong Kong, where Alder currently resides, moved in May last year to put in place strict licensing rules for crypto firms that meant they can't serve retail clients.
"I think more importantly from a public's perspective, is that the way in which they bundle a whole set of activities which are normally segregated, in conventional finance gives rise to massively untoward risk," Alder said at the meeting talking about crypto firms.
UPDATE (Dec.15, 15:04 UTC): Adds FCA comment and FCA chair job description.
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