For the past two weeks, the US Securities and Exchange Commission (SEC) has been occupied with cracking down on crypto exchanges operating within its jurisdiction. On the other side of the divide is the UK’s Financial Conduct Authority (FCA), which, as reports indicate, is barely moving an inch in enforcing regulations.

A Possible Calm Before the Storm

The current sentiment is that the SEC is seen as using its powers to tackle perceived violators of its securities laws. As of late, the US financial watchdog slammed charges against Kraken last week over the allegation that the crypto exchange is offering unregistered securities.

Last Thursday, the commission filed a suit against the issuer of the now-collapsed TerraUSD stablecoin, Terraform Labs. Add to the long-standing court battle between the SEC and Ripple Labs. The crypto space has never seen such a level of scrutiny from a single regulatory body.

Meanwhile, the FCA in the United Kingdom has a stringent registration process that it uses to screen crypto firms before granting them an operating license. So far, the regulator is reported to have flagged down 51 unregistered crypto firms serving clients in the country of which observers believe the FCA is not ready to take action against them.

Interestingly, most unregistered companies have been on the FCA’s list since 2021. By law, digital asset service providers must be registered with the FCA and comply with its anti-money laundering guidelines.

A former FCA official, James Alleyne, commented on FCA’s inactivity regarding the regulator’s lack of enforcement against crypto service providers. Alleyne wants the FCA to go after unregistered firms serving UK clients and that the regulator should covertly act against them.

To its credit, the FCA is known to have taken a strict stance in registering crypto exchanges, to the dismay of the UK’s crypto space.

Assessing FCA’s Powers

The UK’s financial watchdog has investigation and enforcement powers set out in the country’s money laundering rules. Under these guidelines, the FCA is empowered to take action against violators within its oversight’s scope.

In this case, operating an unregistered crypto exchange is a criminal offense. Based on existing financial rules, the FCA can also take enforcement action against crypto firms if they are found to have unlawfully operated their business activities.

Alleyne believes that the FCA must take stringent action against those 51 unregistered crypto companies to curb criminal activities in the digital asset industry. The current conservative government in the UK is known to have an open-door policy to cryptocurrency which aligns with prime minister Rishi Sunak’s vision of turning the country into a digital financial hub.

Meanwhile, the regulator is poised to gain more powers once the Financial Services and Markets Bill is passed later in the year.