FCA Crypto Custody Principles: Increased Pressure on Firms to Enhance Security

The UK’s Financial Conduct Authority (FCA) has released new guidelines on digital asset custody, placing increased pressure on cryptocurrency firms to bolster their security measures. These principles aim to protect clients from losses due to fraud or hacking incidents. The guidelines include stringent requirements for secure cryptocurrency storage, clear segregation of client assets from company assets, and comprehensive anti-money laundering and counter-terrorism financing procedures. These principles are expected to increase compliance costs for firms, but will simultaneously build investor confidence in the cryptocurrency market. Firms will be obligated to implement these principles to avoid potential penalties. This move is part of a growing global effort to regulate and safeguard the cryptocurrency market from increasing risks.