The DEF made these comments in a response to an FCA consultation paper, and shared that response exclusively with CoinDesk, according to the report.
When determining the scope of regulations, “Control should be the determinative factor,” the DEF said, per the report.
The FCA announced in December that it was seeking feedback on its proposals for U.K. crypto rules and that it would accept responses until Feb. 12.
The regulator’s proposed crypto rules encompass a range of areas, including admissions and disclosures, market abuse, crypto trading platforms, intermediaries, staking, lending and borrowing, decentralized finance and prudential requirements.
“Regulation is coming, and we want to get it right,” David Geale, executive director for payments and digital finance at the FCA, said when announcing the consultation on the rules. “We’ve listened to feedback, and now we’re setting out our proposals for the U.K.’s crypto regime.”
“Our goal is to have a regime that protects consumers, supports innovation and promotes trust,” Geale added.
In January, the FCA posted information for firms that want to offer crypto-related services in the U.K. under the crypto asset regulatory regime that is expected to come into effect in 2027.
The information published to help firms prepare for the new regulatory regime covers crypto asset regulated activities; the FCA’s standards for crypto asset firms and individuals; the regulator’s approach to authorization, supervision and enforcement for firms that undertake these activities; a gateway for firms that want to undertake crypto asset activities; and a proposed transitional provision that will allow existing crypto asset firms that fail to secure authorization to wind down their U.K. business in an orderly way.
The FCA said in its January announcement that over the following months, it will publish policy consultations setting out its proposed rules and guidance, consider the responses to those consultations, and then set out its final rules and guidance in policy statements.
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