The UK Financial Conduct Authority’s Plan to Recover Costs from Stablecoins and Crypto

The UK Financial Conduct Authority (FCA) has recently revealed its intention to recover approximately $8 million in costs associated with the supervision of stablecoins and crypto. This initiative, detailed in a March 19 release, aims to impose fees on stablecoin issuers and digital asset custodians to cover these expenses.

The FCA plans to recuperate £6.2 million ($7.9 million) for new stablecoin regulations and a broader regulatory framework. An additional £0.2 million ($254,400) will be collected for expanding the financial promotions perimeter. These costs, falling under the “cryptoasset” category, add up to a total of £6.4 million ($8.1 million). These funds will contribute to the FCA’s annual funding requirement of £755 million ($960 million).

The cost recovery initiative is part of the FCA’s 12-month business plan, outlining various regulatory objectives for the UK market. The agency aims to establish a proportionate market abuse regime for digital assets and sustain its existing crypto financial promotions regime.

Regulatory Goals Beyond Crypto

While crypto regulations are a key focus, the FCA’s business plan extends well beyond this sector. It includes plans to oversee digital markets and evaluate the impact of artificial intelligence (AI) on financial markets.

Background and Context

Past developments shed light on some of the FCA’s current strategies. The expenses related to new regulations likely stem from the agency’s efforts to address stablecoin regulations since November 2023. The upcoming market abuse regime builds upon pre-existing rules from 2016, focusing on insider trading, unauthorized disclosure, and market manipulation – domains not initially targeting the crypto industry.

Recent Regulatory Actions

The FCA has already rolled out a financial promotions regime, applied to the crypto sector in October 2023. Compliance challenges have led some crypto firms to exit the UK market, while others have been placed on a cautionary list.

The FCA’s plan to recover costs from stablecoins and crypto reflects its dedication to enforcing appropriate regulations in the digital asset space. By leveraging fees from industry stakeholders, the agency aims to cover its supervision expenses while upholding market integrity and investor protection.