Fintech & Crypto
Investment firms are increasingly using innovative technologies like blockchain, distributed ledger technology, artificial intelligence, and machine learning for services ranging from trade matching and execution to safe custody of assets. Algorithmic trading is becoming ever more popular along with high frequency trading. Financial institutions have increasingly been drawn to digital assets and related technologies which has garnered FCA focus through its policy on regulated security tokens akin to financial instruments under the financial services and markets act (FSMA).
On the investment management front, firms have been implementing ‘robo’ techniques for advice and investment management. In light of the implementation of the fifth money laundering directive (5MLD) in the UK in January 2020, previously unregulated crypto firms such as crypto exchanges and crypto e-wallet operators were brought within the regulatory perimeter and are required to register with the FCA.
Much has been happening in the crypto space with the FCA's crypto asset taskforce in action and several consultations and policies that followed.
Through its work the FCA made it clear that crypto derivatives are regulated products irrespective of the underlying assets and a ban on the sale and distribution of crypto derivatives referencing unregulated crypto assets to retail clients was recently imposed by the FCA. Firms such as Kraken have pioneered in the crypto currency futures space offering both OTC and on-venue trading through an MTF. The digital assets security token space recently gained traction with the authorisation of Archax with brokerage, custody and MTF permissions.
We are currently the trusted regulatory, compliance, and risk partner to innovative Multilateral Trading Facilities including those utilising blockchain and artificial intelligence capabilities.
How Pillar 4 Can Help
> Guidance on navigating the FCA’s approach to crypto business models
> Bespoke advice and guidance to navigate the authorisation process
> Staff skills and competency assessments
> Support in formulating the right governance structure for your firm
> Pro bono initial assessment of the impact of IFPR on your business
> Financial modelling and full implementation of the IFPR and shift from ICAAP to ICARA
> Developing integrated risk management, capital monitoring, and reporting tools
> Developing suitable pillar 2 approaches
On-going compliance support
> Providing specialist advise
> Revamping compliance monitoring programmes to something practical and workable in line with regulations
> Providing risk based on-going compliance monitoring and testing
> Support in regulatory reporting and capital adequacy reporting