Read Source Article UK Regulator Advises Banks to “Enhance Your Scrutiny” When Dealing with Crypto Firms
The Financial Conduct Authority, a financial industry regulator in the UK, has called for appropriate caution and enhanced scrutiny from banks as they handle firms engaged in crypto trading. In an open letter to CEOs, the FCA’s Executive Directors of Supervision, Megan Butler and Jonathan Davidson, listed a number of measures that banks can take to shield themselves from the dangers that emanate from firms that deal in crypto assets. While appreciating the value of digital currencies as speculative investments and as a means of raising funds for startups, the FCA also noted that cryptos are prone to abuse from malicious parties due to their anonymity.
Due Diligence and Client Engagement are Key
The FCA began by defining crypto-focused clients as those “who derive significant business activities or revenues from crypto-related activities.” They include clients who operate crypto exchanges which facilitate the conversion of fiat to crypto, those who engage in trading, and those who issue ICOs.
While the banks’ conduct is expected to differ as they handle different clients, the FCA suggested a number of measures they can take to reduce their risk. Key among them is developing their staff and giving them sufficient knowledge regarding the crypto industry.
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