FCA crypto regulators take advantage of TradFi and DeFi, says exec

Financial authorities in the UK aim to take the best of traditional finance (TradFi) and decentralized finance (DeFi) when it comes to regulating cryptocurrencies such as Bitcoin (BTC), according to an executive at the Financial Conduct Authority (FCA).

The cryptocurrency community and regulators have long pondered the best approach to regulate the crypto market, raising concerns about overregulation or overregulation.

Matthew Long, the FCA's director of payments and digital assets, says the right way to regulate the industry is to combine different approaches and see which works best.

“What we're trying to do is take the best of traditional finance and understand the nature of the system we've got,” Long said at a panel discussion at the FT Crypto and Digital Assets Summit on May 8.

“The simplest and most straightforward answer is them. [FCA] They're trying to take the best out of traditional finance, so it's the same risk, the same regulation and not reinventing the wheel,” the FCA's director of digital assets, he added.

But we and we must otherwise respond to the differences of cross-border globalization. So to be honest, it's a bit of both.”

The FCA has long mentioned that it sees many things that are relatively straightforward and ultimately “definitely” not. On the other hand, there are things that are expected to be met with a lot of opposition, but they are successful in the end.

During the panel, the FCA executive mentioned harm in both decentralized finance (CeFi) and DeFi, emphasizing that many authorities around the world have tools to counter money laundering in CeFi.

According to Long, the FCA is looking for opportunities to retain good actors in the crypto industry and make it “cleaner, safer and better.”

Related: Revolut launches dedicated crypto exchange for UK users

In recent years, the United Kingdom has become a significant player in the crypto economy, drawing significant attention from the Financial Conduct Authority (FCA).

In August 2023, the FCA reported that the authority had approved the registration of 38 crypto companies from 2020, out of a total of 300 applications.

The FCA is also actively working to increase its capacity to detect and combat crypto market abuse and prevent the industry from placing illegal crypto ads.

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