FCA crypto crackdown will ‘wipe out’ bad actors, says Coinbase boss
The financial watchdog’s clampdown on digital assets will remove bad actors and attract more customers, The UK boss of one of the world’s largest crypto platforms has said.
Keith Grose, UK chief executive of Coinbase, said the rules outlined by the Financial Conduct Authority (FCA) earlier this month will “wipe out” firms who do not wish to comply, raising consumer trust.
Speaking in an interview with City PM, Grose said: “It will wipe out people that don’t want to focus on compliance. That’s going to be a no-go now in the UK.”
The FCA unveiled a “landmark” shakeup to the market that will force companies to win approval from the regulator in order to deal with British customers and subject to higher levels of scrutiny.
Under new rules, crypto platforms must hold a full financial licence, known as the FSMA Part 4A Permission, to conduct businesses with UK clients, as of October 2027.
All firms must also meet stronger resilience standards and will be subject to capital and stress testing to ensure they can withstand market shocks. The watchdog has also enacted a new industry-led framework aimed at detecting and preventing market manipulation, insider trading and illicit activity.
Failing to obtain the licence or refusing to comply with rules will result in platforms being removed completely from the market.
Roughly eight per cent of UK adults hold cryptocurrency, representing 4.5m people, according to the latest FCA figures.
Grose said the higher levels of regulation would allow the sector to legitimise itself with consumers who are still sceptical of the asset.
“It…builds confidence in our overall system and security,” he said, “They know I can go to the financial ombudsman if something goes wrong.”
Burnham, Rigby and cryptocurrencies
Grose also welcomed the return of Lucy Rigby as City minister, echoing the wider fintech sector’s sentiment that she “gets” the importance of the companies in driving economic growth.
Rigby has previously expressed support for the fintech sector and in her previous tenure as City minister aimed to turn the UK into a more favourable location for companies, but prime minister Andy Burnham is yet to cement his position on digital assets.
Burnham previously voiced his support of the digital asset when Coinbase’s policy team
met the PM during his time as mayor of Greater Manchester.
Grose said: “He gets that digital assets are an important part of innovation. I’m not saying he’s deep in this ecosystem, but I think he is supportive.”
He urged both ministers to continue the progress made under Starmer’s government of allowing fintechs to carve out more space in the domestic market. Rigby must once again spearhead this charge to stop the US from luring companies over.
Challenging brokers
Coinbase has also been granted authorisation in the UK to provide traditional financial instruments, such as equities and commodities, on its platform.
The green light from the watchdog comes as the exchange continues to struggle in a weak crypto market. The group’s stock has tumbled 30.8 per cent this year to date, trading at $163 (£121m).
The firm’s billionaire founder and chief executive Brian Armstrong also announced plans to cut 14 per cent of its global workforce in April in order to cut costs.
Grose said the “stamp of approval” from regulators would allow Coinbase to go toe-to-toe with established providers and broaden its capabilities beyond the crypto market.
The licence also allows Coinbase to compete with platforms such as AJ Bell and IG who are offering crypto assets to prevent customers looking elsewhere.
“You’re heading into this world where everyone is trying to compete to be the primary financial account,” he said.
“Certainly it will be more competitive.”