The UK’s financial watchdog came under “political pressure” to welcome crypto firms into the British market, its former chairman has said.
Charles Randell, who stepped down as chairman of the Financial Conduct Authority (FCA) in the spring, said it was an example of the kind of influence that elected politicians have tried to exert on independent regulators.
“In the context of crypto, in my experience as FCA chair, was that there was a lot of political pressure to welcome firms, some of which are now under criminal investigation by the US Department of Justice. And all the evidence that we had at the FCA was that wasn’t a very good idea,” he told a conference hosted by the Bank of England’s Prudential Regulation Authority on Tuesday.
While Randell did not name the crypto firms in question, the FCA refused to allow cryptocurrency exchanges including FTX and Binance to operate in the UK.
“We taken quite a bit of heat from people saying we are allowing this innovative activity to move to other jurisdictions, and that other jurisdictions are stealing a march,” the FCA’s chief executive, Nikhil Rathi, told a committee in House of Lords last November.
That came after the FCA “sounded the alarm over supervising Binance and placed restrictions on it so it could not undertake any regulated activity in the UK without written consent”, Rathi said.
Speaking on Tuesday, Randell said the episode signalled a wider “governance challenge” for regulators: “How do you embed the safeguards against agency capture – either by the industry or selected industry interests, or actually by political interest?”
Binance and its co-founder, Changpeng Zhao, have since been accused by the US Securities and Exchange Commission of operating an “elaborate scheme to evade US federal securities laws”. Binance has said the SEC’s action was “unjustified”.
Meanwhile, FTX’s founder, Sam Bankman-Fried, has been charged with fraud, conspiracy to commit money laundering and conspiracy to defraud the US and violate campaign finance laws. US prosecutors accuse him of stealing billions of dollars in FTX customer funds to plug losses at his Alameda Research hedge fund. Bankman-Fried has pleaded not guilty to the charges.
The UK Treasury was contacted for comment.