Cryptoasset firms: Authorisation, supervision and enforcement

Authorisation

Firms wishing to provide specific financial services must first be authorised by or registered with us. So too must individuals who hold certain important functions at those firms.

We will only authorise a firm or approve an individual where they meet the minimum standards and we believe they will continue to do so. Where they do not, we will not allow them to enter the relevant financial market.

Firms wanting to provide services covered by the new cryptoasset regulated activities will need to be authorised by us and should consider familiarising themselves with our authorisation process[2].

Read more information[3] on how the gateway for firms that want to undertake the new cryptoasset regulated activities will operate. 

Supervision

Once authorised, cryptoasset firms will be subject to our supervision.

We define supervision as the regulatory oversight of firms, and of individuals controlling firms, to reduce actual and potential harm.

Our approach to supervision[5] seeks to be proportionate, prioritising key areas of focus and firms that pose a higher risk to meeting our objectives.

In line with our Strategy 25-30[6], our priorities as a regulator are to support growth, fight crime, help consumers and be a smarter regulator. We intend to focus our market engagement on areas where harm is the greatest, and to take a more flexible approach, with less intensive supervision for those firms demonstrably seeking to do the right thing.

We will also endeavour to make our areas of focus predictable so that firms have an earlier chance to make positive change without the need for regulatory action. In our strategy, we have committed to streamlining how we set our supervisory priorities and sharing more insights from our supervisory work. By committing to invest in our technology, people and systems, we can act faster and more assertively where harm is greatest.

Cryptoasset firms providing, or planning to provide, cryptoasset services in or to the UK should consider familiarising themselves with our approach to supervision[5].

Enforcement

Once authorised, cryptoasset firms will be subject to our enforcement powers.

Our approach to enforcement is intended to ensure that there are real and meaningful consequences for firms and individuals who cause significant harm to consumers, and to markets.

We consider the deterrent impact of any enforcement action we take and focus our efforts on achieving impactful deterrence aligned to our strategic priorities.

Our enforcement staff work closely with our authorisation and supervision functions, as well as with other regulators and law enforcement agencies to detect misconduct and unauthorised business.

Enforcement powers

Under the Financial Services and Markets Act 2000 (FSMA), we have a wide range of criminal, civil and regulatory powers to protect consumers and act against firms and individuals that don't meet our standards.

These powers include imposing financial penalties, prohibiting individuals from conducting regulated activity, public censure, and prosecution. These powers, and the powers we have under other legislation are unchanged by the Treasury’s proposed amendments to the Regulated Activities Order.

We will be able to use our enforcement powers against firms and individuals carrying out the new cryptoasset regulated activities and we will apply the same approach to firms and individuals carrying out these activities, as we do with other regulated firms.

Cryptoasset firms providing, or planning to provide, cryptoasset services in or to the UK should consider familiarising themselves with our enforcement powers[7].