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The UK's Financial Conduct Authority (FCA) says it will continue to enforce a high bar for crypto registration attempts, Tether plans to expand beyond stablecoins, and a bipartisan US stablecoin bill hits Congress.
The FCA has said it has no plans to speed up the registration process for UK crypto firms, arguing that a slower pace is necessary for quality control.
Sarah Pritchard, executive director of markets at the FCA, said the regulator continues to hear concerns about the length of time it takes firms to register for anti-money laundering (AML) purposes. The FCA has also received complaints that the bar is set too high for crypto firms.
“The argument is we should be faster, let more in,” said Pritchard. “Achieving that would be easy to measure. Pretty bar charts could decorate our annual report.
“But a simple focus on numbers could undermine trust and reputation — another of our productivity drivers.”
Speaking at the TheCityUK International this week, Pritchard warned that lower standards could leave the UK market "open to abuse” by crypto firms.
“Instead, we take a longer view,” she said. “Crypto’s success — and the success of any base for crypto firms — relies on trust being built and maintained. Sustainable growth relies, after all, on faith in the system.”
Since January 2020, when the FCA first took on the role of registering crypto firms for AML purposes, 344 firms have applied to register but only 45 have been successful.
The vast majority (almost 90 percent) of applications received are either withdrawn, refused or rejected by the FCA.
As covered by Vixio, the FCA has previously described the general quality of applications from crypto firms as "poor".
Last year, Pritchard noted that the failure rate among crypto firms is higher than among any other industry that has newly come under the FCA’s remit.
Asked why so many applications fail, she said that many firms display a lack of understanding of customer due diligence, risk assessments, transaction monitoring and governance.
“In many cases, key personnel lacked appropriate knowledge, skills and experience to carry out allocated roles and control risks effectively, and were unable to evidence they met the standards for registration.”
Tether to expand beyond stablecoins
Stablecoin issuer Tether has announced plans to restructure its business across four new "core divisions", namely finance, data, power and education.
Tether Finance will serve as the company's digital asset services division, responsible for managing its stablecoin products and other financial services.
Tether Data, the firm's specialist technology division, will pursue "strategic investments" in emerging technologies such as AI and peer-to-peer (P2P) platforms.
Tether Power will focus on sustainable Bitcoin mining and energy investments, while Tether Edu will invest in digital skills education around blockchain and P2P technologies.
“We disrupted the traditional financial landscape with the world’s first and most trusted stablecoin. Now, we’re daring to kickstart inclusive infrastructure solutions, dismantling traditional systems for fairness,” said Paolo Ardoino, CEO of Tether.
“With this evolution beyond our traditional stablecoin offerings, we are ready to build and support the invention and implementation of cutting-edge technology that removes the limitations of what’s possible in this world.”
The move formalises changes to Tether’s business model that have emerged gradually over the last few years.
Ardoino said the goal of these changes is to “empower” individuals, communities, cities and nations to become self-sustainable and free.
As covered by Vixio, Tether already has close relations and existing partnerships with a number of governments, including those in Georgia, Uzbekistan and, most prominently, El Salvador.
Tether has had a close relationship with El Salvador since September 2021, when the country's President, Nayib Bukele, began buying Bitcoin using public money.
Since then, Tether has announced various investments in El Salvador, including participation in a $1bn project called Volcano Energy, which will be the world’s largest Bitcoin mining farm.
In December 2023, Tether also announced that it will be sponsoring a new El Salvador Freedom Passport in partnership with the Ministry of Foreign Affairs.
Previously, for a fee of $1m, the scheme allowed up to 1,000 individuals each year to purchase a Salvadoran passport for themselves and their family members.
As of this month, however, El Salvador is currently offering 5,000 passports to highly skilled foreign workers free of charge.
In February this year, following Bukele’s re-election, Ardoino said he had relocated permanently to El Salvador, settling in El Zonte, a resort town on the Pacific coast.
Bipartisan stablecoin bill hits Congress
US Senators Cynthia Lummis (R-WY) and Kirsten Gillibrand (D-NY) have introduced a new stablecoin bill that seeks to protect consumers and safeguard the US dollar from abuse by bad actors.
The 179-page Lummis-Gillibrand Payment Stablecoin Act will require stablecoin issuers to maintain one-to-one reserves and will prohibit unbacked, algorithmic stablecoins.
It will also create federal and state regulatory regimes for stablecoin issuers and will aim to prevent illicit or unauthorised use of stablecoins by issuers and users.
“Passing a regulatory framework for stablecoins is absolutely critical to maintaining the US dollar’s dominance, promoting responsible innovation, protecting consumers and cracking down on money laundering and illicit finance,” said Gillibrand.
“To draft the strongest bill possible, our offices worked closely with the relevant federal and state agencies and I’m confident this legislation can earn the necessary support in the Senate and the House.”
Lummis and Gillibrand noted that Federal Reserve chair Jerome Powell and Treasury secretary Janet Yellen have both called on Congress to introduce specific legislation for stablecoins.
Last week, in a hearing at the Senate Banking Committee, several senators said the need for stablecoin regulation is becoming urgent in light of new evidence linking the use of Tether to terrorist financing and Russian sanctions evasion.
