My colleagues flagged earlier this week the potential enforcement targets coming out of the FCA's business plan for 2019/2020, but there were also some interesting statements on Fintech. Innovation (along with data and data ethics) was identified as one of a number of strategic challenges that the FCA faces.

  • Cryptoassets - the FCA indicated that they will provide advice to HM Treasury with a view to extending the regulatory perimeter to include utility and exchange tokens. The FCA has already consulted on how security tokens fit into the existing perimeter, but this didn't seem to be particularly controversial. Bringing new tokens into scope will bring into question how to define such tokens without accidentally regulating other items.
  • Regtech - the FCA stated that it has three priorities in relation to Regtech.
    • continuing the FCA's exploration and experimentation with industry around how to improve the method of data exchange between industry and regulators
    • continuing work around new technology solutions to achieve better, more cost-efficient outcomes in relation to anti-money laundering and financial crime compliance; and
    • expanding on the FCA's activities in relation to vulnerable consumers, and how technology can help firms and consumers achieve positive financial outcomes, including for those consumers with specific health or financial needs.
  • AML techsprint - I personally look forward to the FCA hosting what it terms an international TechSprint on anti moneylaundering (AML) and Financial Crime, during which they will test nascent "Privacy Enhancing Technologies". I don't really know what any of that means or how it can be developed in a sprint!
  • Global response to Fintech - following the announcement of GFIN (for more, see our post here), the FCA has said that they will run a small pilot of cross-border trials alongside 17 other regulators and evaluate the efficacy of the GFIN approach, including barriers to innovation where regulatory approaches are inconsistent. It will be most interesting to see the outcome.

A year to watch!

Following our consultation on cryptoassets we will publish a Feedback Statement and finalised Perimeter Guidance. We will also provide technical advice to the Treasury on extending the perimeter for utility and exchange tokens and on extending our financial crime provisions to certain activities related to cryptoassets.