- The UK’s FCA seeks public feedback on how the Consumer Duty standards should scale with crypto firms to balance innovation, competitiveness, and consumer protection.
The UK’s Financial Conduct Authority (FCA) released a notice on Wednesday, seeking public feedback on its proposed minimum standards for cryptocurrency firms. The move aims to align the required “good business practices” of these businesses with the ones already expected from traditional financial entities, including operational resilience and mechanisms to combat criminal activities in the sector.
The regulator highlighted that the guidelines should be proportionate to ensure competitiveness and innovation in the burgeoning crypto industry without compromising consumer and market protections.
Application of Consumer Duty Rules to Crypto Firms
Central to the discussion is whether the “Consumer Duty” rules should apply to crypto companies. These are a set of requirements that financial entities must follow to deliver good outcomes for retail customers.
The regulations cover areas pertaining to products and services, price and value, consumer understanding, and consumer support. They primarily govern regulated firms, including those in the e-money and payments sector. Additionally, they affect consumer organizations, individual consumers, industry groups, trade bodies, policy makers, regulatory bodies, industry experts, commentators, academics, and think tanks.
Moreover, the FCA wants to establish standards for handling consumer complaints. Meanwhile, it asks for public feedback on when the Financial Ombudsman Service should have jurisdiction on specific issues.
David Geale, executive director of payments and digital finance at FCA, warned that their measure does not eliminate the risks inherent in crypto investments. However, it will help crypto firms navigate their way toward a common standard to help customers have a better idea of what they can expect when investing in digital assets.
“We are working now on what those standards should look like, ahead of legislation to bring it within our regulation,” said Geale.
Targeted Implementation of the New Rules
The new proposal builds on the draft legislation of the HM Treasury (HMT) in April that pushes for the creation of guidelines focusing on crypto trading in exchanges and stablecoin issuance. The financial watchdog is currently crafting comprehensive details on the proposed standards, with the deadline for feedback on the consultation paper due November 12 this year.
On the other hand, the public comments for the discussion paper on the matter concerning the Consumer Duty aspect is open until October 15. The regulator expects to finalize and publish the final rules by 2026.
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