What might Liz Truss’ appointment mean for economic crime, regulation and cryptocurrency?

The FT has recently reported (citing campaign insiders) that the Prime Minister Liz Truss will launch a review of the roles and responsibilities of the UK’s financial regulators. Such a review could see a merging of the Financial Conduct Authority (‘FCA’), the Prudential Regulation Authority (‘PRA’) and the Payments Systems Regulator (‘PSR’) (together ‘the Agencies’).

The FCA and PRA were created fairly recently, in 2010, in the wake of the financial crisis to strengthen regulation and protect consumers’ interests.  The objective of the creation of the FCA was to improve the integrity of the UK financial system by overseeing company behaviour and protecting consumers’ financial interests. The PRA had the statutory objective to ‘promote the safety and soundness of firms’.

Creating a singular, streamlined enforcement agency would presumably have cost benefits, and could perhaps make it easier to oversee the Agencies’ decisions. Harmonisation of policies and training could potentially result in better efficiency and fewer errors. Nevertheless, given the rationale behind the Agencies’ inception and taking into account the current ‘cost of living crisis’ as well as likely impending recession, it would seem strange to strip back on financial regulation now as economic crime tends to upsurge in times of economic crisis.

With critics suggesting that merging the Agencies would be a costly and complex mistake, it will be interesting to see the new Prime Minister’s stance on a potential merger and, indeed, on economic crime more widely. Prosecutors such as the Serious Fraud Office and Director of Public Prosecutions have recently devised terms of introducing further legislation in this area urged, among other things, by prosecutors’ call for reform in respect of disclosure.

Cryptocurrency

In 2018, Liz Truss stated that the U.K. ‘should welcome cryptocurrencies in a way that doesn’t constrain their potential^[1].’ It appears that the current Government are continuing in this vein and Richard Fuller, the Economic Secretary to the Treasury, said the government wants the UK to be the ‘dominant global hub for crypto technologies^[2].’ The Financial Services and Markets Bill (‘The FSM Bill’) saw its second reading in Parliament at the beginning of the month and will soon be reviewed at the Committee stage in the House of Commons. The FSM Bill is intended to create a regulatory framework for stable coins. The Economic Crime (Transparency and Enforcement) Act, which will grant law enforcement new powers to seize crypto assets, will also remain in place. Clearly, the government are showing an appetite for welcoming the growth of cryptocurrency in the UK. We can assume that with that will come further regulation, and thus it will be vital for those setting up NFT platforms or buying and selling cryptocurrency to err on the side of caution and, if in any doubt, to instruct legal advice from the outset.

The Truss government plans to carry on with the Financial Services and Markets Bill, which is intended to bolster regulation around crypto currency. The bill went through its second reading this month. The government plans to bring forward the Economic Crime (Transparency and Enforcement) Bill, which proposes to give enforcement bodies the necessary powers to seize and recover crypto assets.

Truss’ primary objectives concern, inter alia, the cost of living crisis, the war in Ukraine and fixing the huge problems within the NHS. It will be interesting to see over time how she approaches her objectives of deregulation, enforcement and combatting financial crime more generally.

How Gherson can assist

Gherson’s white-collar crime and regulatory team are able to provide advice and assistance with AML, regulatory and sanctions compliance, including in situations involving cryptoassets. 

Additionally, the team has recently started a series on the regulation of crypto, with the aim of advising those who work in the compliance of this sector. Moreover, for those who would like advice on relevant issues, including those who have had issues with the FCA registration process, our specialist regulatory and compliance team can guide individuals and companies through the process.

Please do not hesitate to contact us for further advice, send us an e-mail, or, alternatively, follow us on Twitter, Facebook, or LinkedIn to stay up-to-date.

The information in this blog is for general information purposes only and does not purport to be comprehensive or to provide legal advice. Whilst every effort is made to ensure the information and law is current as of the date of publication it should be stressed that, due to the passage of time, this does not necessarily reflect the present legal position. Gherson accepts no responsibility for loss which may arise from accessing or reliance on information contained in this blog. For formal advice on the current law please do not hesitate to contact Gherson. Legal advice is only provided pursuant to a written agreement, identified as such, and signed by the client and by or on behalf of Gherson.

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