UK Financial Regulator Plans Crypto Market Abuse Regime in 2024

The Financial Conduct Authority (FCA), the U.K.’s main regulatory body for financial markets, announced its intention to establish a market abuse regime for crypto assets in its 2024-2025 business strategy released Tuesday.

The move aligns with the government’s consultation paper published last year, which outlined plans for such a regime.

The market abuse regime aims to achieve three key objectives:

Consumer Protection: The regime seeks to safeguard consumers by deterring manipulative practices within the crypto market. This could involve preventing insider trading or artificial inflation/deflation of crypto asset prices.
Market Integrity: The FCA intends to promote a fair and orderly crypto trading environment by establishing clear rules and regulations,. This can help build trust and encourage wider participation.
International Competitiveness: A well-defined regulatory framework positions the U.K. as a competitive player in the global crypto market. This could attract businesses and investors seeking a transparent and secure environment for crypto activity.

The proposed regime is expected to place responsibility on crypto exchanges to identify and disrupt manipulative behaviors. This could involve implementing transaction monitoring systems and reporting suspicious activity to the FCA.

The FCA already has a promotions regime in place for crypto assets. This requires firms to include risk warnings and offer a 24-hour cooling-off period for first-time buyers. Additionally, the FCA is currently consulting on regulations for stablecoins, a type of cryptocurrency pegged to a fiat currency like the U.S. dollar.

The FCA’s business strategy did not specify how it plans to recover the costs associated with implementing these new regulations.