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UK Financial Watchdog Grants Licenses to Archax and Gemini

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The UK’s Financial Conduct Authority has granted operational licenses to two cryptocurrency exchanges operating in the country: digital security exchange Archax and the UK branch of the Winklevoss twins’ Gemini exchange.

According to the Financial Conduct Authority (FCA) website, both Archax and Gemini Europe Services are currently registered in the U.K. as crypto asset firms as of Aug. 18 and Aug. 19, respectively. Both crypto exchanges had to meet compliance requirements in terms of a risk assessment of Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) regulations which were mandatory as of Jan. 10.

Archax said in an Aug. 19 blog post that the FCA’s decision had made it the “first ever FCA regulated digital securities exchange and custodian in the UK.”

More than a month ago on July 6, Kraken claimed to have become the first crypto exchange licensed by the FCA. However its offshoot Crypto Facilities is currently only listed as being authorized for “specific activities and product types,” but not in the same category as Archax and Gemini.

UK’s Financial News reported Kraken CEO Timo Schlaefer saying the exchange had been granted a Multilateral Trading Facility licence by the FCA. For now, Archax and Gemini are the only two firms on the FCA’s list of registered crypto-asset firms.

Regulatory restrictions for UK crypto firms

The new regulations enforced by the FCA on crypto asset firms is part of the agency’s effort to comply with those from the European Union’s 5th Anti-Money Laundering Directive (5AMLD) and the Financial Action Task Force (FATF).

The FCA was officially appointed as the regulator of all cryptocurrency businesses in the U.K. in January. Companies doing business in the country need to establish both monitoring and control systems to eliminate potential AML and CTF threats.

The agency required all crypto firms to register before June 30, to ensure that their applications would be processed before Jan. 10, 2021. Failure to comply by the deadline means that they will need to cease their trading activity in the U.K. Exchanges including CEX subsidiary Decent Finance Limited have said they are authorized to carry out “electronic money activities” while U.K.-based Coinfloor says it “maintains communication” with the FCA.



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Regulation

SEC has no authority over crypto, CFTC commissioner argues

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Amid the United States Securities and Exchange Commission (SEC) expanding the scope of oversight of the cryptocurrency industry, a commissioner with the Commodity Futures Trading Commission (CFTC) argued that crypto regulation doesn’t fall under the SEC’s jurisdiction.

CFTC commissioner Brian Quintenz took to Twitter on Wednesday to declare that cryptocurrencies like Bitcoin (BTC) should be regulated by the CFTC rather than the SEC.

Quintenz stressed that cryptocurrencies are commodities and thus fall under the CFTC’s jurisdiction, as opposed to securities that are regulated by the SEC, stating:

“Just so we’re all clear here, the SEC has no authority over pure commodities or their trading venues, whether those commodities are wheat, gold, oil….or crypto assets.”

Quintenz’s remarks came just about half an hour after former CFTC chairman Christopher Giancarlo made a similar statement on Twitter, arguing that the CFTC is the only U.S. regulatory agency that has experience regulating markets for Bitcoin and crypto.

“If the Biden Administration is serious about sensible cryptocurrency regulation, it needs to nominate a CFTC chairman,” Giancarlo noted.

The U.S. House Committee on Agriculture, a standing committee in the U.S. House of Representatives, subsequently supported Quintenz’s statement. The committee’s official Twitter account argued that crypto is “bigger than the SEC,” and the Congress “needs to write the rules of the road to protect investors and innovation in the digital economy.”

Related: ‘Nakamoto’s innovation is real,’ says SEC Chair Gary Gensler

The new statements apparently come in response to recent remarks by the SEC chairman Gary Gensler calling for increased regulatory oversight of the crypto industry to expand the regulatory scope with decentralized exchanges. Gensler reportedly outlined that there’s been much discussion about what kind of digital assets should fall under the SEC’s purview as the authority previously confirmed that major cryptocurrencies like Bitcoin and Ether (ETH) were not securities.