TLDR
- The UK Financial Conduct Authority (FCA) has only 18 staff working on crypto asset policy.
- FCA has 109 total staff working on crypto assets, up from 9 in 2019.
- The new UK government faces challenges in providing regulatory clarity for the crypto sector.
- Experts suggest creating a new regulatory body dedicated to digital assets.
- There’s a shortage of resources in crypto asset wholesale policy at the FCA.
The UK’s Financial Conduct Authority (FCA) is facing a significant staffing shortage in its crypto asset policy team, potentially hampering the country’s ability to regulate the rapidly evolving digital asset sector effectively.
This revelation comes from data obtained by Quant, a blockchain for finance provider, through a Freedom of Information (FOI) request.
According to the FOI data, while the FCA now has over 100 staff members working on crypto assets, only 18 are dedicated to policy – the crucial function responsible for drafting and implementing market regulations.
This understaffing in key policy areas could pose challenges for the new UK government’s plans to embrace digital assets and tokenization.
The FCA’s total crypto-focused staff has grown from just 9 in 2019 to 109 in 2024, reflecting the increasing importance of digital assets in the financial landscape.
However, the distribution of these staff members reveals potential gaps in the regulatory approach. The majority of the crypto-focused employees are split between authorization (31) and supervision (31), with policy lagging behind despite recent growth from 11 staff in 2023 to 18 in 2024.
Gilbert Verdian, Founder and CEO of Quant, emphasized the need for a new approach to regulation:
“There is now widespread recognition that the unregulated crypto experiment has failed. But digital assets and tokenisation improve many areas within financial services, the issue is that the UK lacks a body which can drive forward responsible and innovative regulation to govern all of this.”
The data also highlights a particular shortage in crypto asset wholesale policy, with only 9 employees in this area. This could be a critical weakness as digital assets gain prominence in wholesale capital markets.
The Labour Party, now in government, has committed to “embracing securities tokenisation and a central bank digital currency,” making this an area of key focus.
Verdian suggests a bold solution to address these regulatory challenges: “A separate ‘Digital Finance Agency’ dedicated entirely to digital assets can help the UK stay ahead of the pack when it comes to the future of finance.”
He argues that such a body could provide the focused attention and resources needed to develop an agile and effective regulatory framework for digital assets.
The understaffing issue at the FCA comes at a crucial time for the UK’s financial sector. The new government has committed to “streamlining the regulatory rulebook” under its Plan for Financial Services.
However, without adequate resources and expertise in digital asset regulation, the UK risks falling behind other jurisdictions and potentially losing crypto firms to more accommodating regulatory environments.
Tokenization, in particular, represents a significant opportunity for the UK to modernize its financial infrastructure.
“Tokenisation offers a way to future-proof our financial services infrastructure for the next 30 years, putting our banking, payments and capital markets at the cutting edge of technological innovation,” Verdian explains.
However, realizing this potential at scale requires a robust and well-resourced regulatory approach.
The FCA, for its part, has noted that in addition to its dedicated crypto asset teams, it has specialist colleagues across the organization who also work on crypto assets alongside other sectors.
However, the question remains whether this dispersed approach can provide the focused expertise needed to navigate the complex and fast-moving world of digital assets.
