FCA Faces Criticism Over Crypto Enforcement Delays and Staff Shortages

The UK’s Financial Conduct Authority (FCA) is under scrutiny by the National Audit Office (NAO) for its sluggish approach to enforcing crypto laws and a lack of expertise among its staff in the cryptocurrency domain.

Enforcement Delays and Regulatory Concerns

The NAO's recent report highlights potential uncertainties in the regulatory landscape, citing the FCA's slow response to enforcing crypto laws. Despite mandating compliance with anti-money laundering regulations for digital asset firms in January 2020, the FCA did not take enforcement actions against illegal crypto ATM operators until February 2023. This delay raises concerns about the FCA's ability to effectively address risks in the crypto sector.

Challenges in Data Management and Staff Turnover

Efforts by the FCA to improve data management practices for more efficient risk identification are noted in the report. However, these changes are expected to take years, with identified data risks not likely to be mitigated before 2025. Persistent staff turnover, especially at senior levels, remains an ongoing issue, posing risks to specialized areas within the FCA.

New Hires and Expertise Focus

To address staffing challenges, the FCA has recruited and trained over 2,000 new staff members, with a focus on crypto expertise. Despite this, the shortage of crypto-savvy staff has contributed to delays in registering crypto-asset firms under money laundering regulations. The report emphasizes the importance of maintaining specialist skills.

International Collaboration and Enforcement Actions

The FCA is actively enhancing international engagement efforts and has established an international steering committee for cross-organizational oversight and support. While the FCA collaborates with other organizations to address common issues, concerns persist about its ability to manage global developments strategically.

The FCA reportedly handled over 1,400 cases of illegal digital asset activity between January 2020 and June 2023. It also received over 13,350 scam reports while supervising 50,000 firms across the UK.

Global Crypto Market Overview

The global cryptocurrency market, currently valued at $1.59 trillion, reflects a 3% change in the last 24 hours and an impressive 90.23% change compared to one year ago, according to data from CoinGecko.