On 29 June 2022, the FCA published the key themes emerging from its first policy-focused CryptoSprint events in May and June 2022. The main aim of the CryptoSprint was for the FCA to increase its understanding of emerging cryptoasset market practices and seek industry views on what an appropriate regulatory regime might look like.
At the CryptoSprint teams focussed on one of the following problem statements:
- What information should be provided to buyers of cryptoassets and how should cryptoassets be vetted before being traded on an exchange?
- How do we identify (and test) where regulatory obligations on centralised and decentralised cryptoasset models should be placed?
- What gaps need to be addressed in the UK’s existing custody regulatory framework for custody of cryptoassets to help protect UK consumers and markets?
A number of cross-cutting themes were identified and these included participants suggesting a principles-based approach to help accommodate the pace of technology and market evolution. Participants also argued that technology neutrality was essential to avoid policymakers ‘picking winners’ in developing markets and that regulators should avoid ‘reinventing the wheel’ with new regulatory standards. They suggested that existing rules and tools should be used where possible, for example the Client Assets Sourcebook rules around custody of assets or the Open Banking type model for transparency, rather than creating bespoke new standards.
Another common theme highlighted during the CryptoSprint was an imbalance of information between consumers and service providers, and challenges faced by consumers to fully understand the risks associated with investing in cryptoassets. Through the FCA’s InvestSmart campaign, the regulator is raising awareness and educating retail consumers by highlighting the risk of investing in cryptoassets.