K&L Gates LLP | Michael E. Ruck | Rosie Naylor | Helen Phizackerley
In November 2024, the UK FCA released a Consultation which seeks to clarify its proposed approach to publicising ongoing enforcement action—dubbed the “name and shame” plan—and to assure the wider market of the plan’s benefits. Responses are due by 17 February 2025.
The FCA has now proposed providing affected firms with 10 days’ notice before an announcement is made. It has also agreed that additional matters—such as the impact on affected firms—will form part of its public interest test when it considers whether to make an announcement. It agrees that it will not announce investigations that have begun before the proposals come into effect, but will be able to confirm public knowledge of an ongoing investigation.
These all seem helpful concessions to the plan’s detractors but some difficulties with the proposals persist.
Whilst the FCA argues that many investigations already end up in the public domain because of firms’ wider disclosure requirements, this may not be comforting to firms that do not have relevant disclosure requirements, for example because they are not listed.
The FCA contends that while the announcement of an investigation can be associated with a fall in a firm’s share price, and consequent detriment to a firm, that is often not the case and it is difficult to isolate the impact of an announcement on share prices. However, they do also concede that in some cases large share price falls do appear to have been triggered by announcements of regulatory action.
In its defence, the FCA asserts that announcements may provide an educational opportunity to foster a competitive and credible market environment, but some may feel that this down-plays to too great an extent the “innocent until proven guilty” principle, especially in cases where the FCA decides to name the parties involved.
As promised during his campaign, President Trump has taken significant steps to support the digital asset industry during his first week in office. On 23 January 2025, he signed an executive order initiating digital asset regulatory rollbacks and a new federal framework governing cryptocurrencies, stablecoins, and other digital assets (the Order).
On the same day, the Securities and Exchange Commission (SEC) rescinded the controversial Staff Accounting Bulletin 121, which required crypto custodians and banks to reflect digital assets in their custody as both an asset and a liability on their balance sheets. Earlier in the week, the SEC established Crypto 2.0, a crypto task force designed to provide paths for registration and reasonable disclosure frameworks, and to allocate enforcement resources “judiciously.”
The Order recognizes the role the digital asset industry serves in our economy and aims to support the responsible growth and use of digital assets by promoting dollar-backed stablecoins and providing regulatory clarity. The Order lays the groundwork for a regulatory shift furthering digital assets policy, focusing on the creation of “technology-neutral regulations” tailored to digital assets.
In addition to prohibiting agencies from facilitating any central bank digital currencies, the Order establishes a working group comprised of the heads of various agencies (the Working Group) and sets three deadlines:
- 22 February 2025: Federal agencies must report to the Special Advisor for AI and Crypto with the regulations or other agency guidance that affect the digital asset sector.
- 24 March 2025: Federal agencies must submit recommendations on whether to rescind or modify these regulations and guidance.
- 22 July 2025: The Working Group must submit a report to the President on regulatory and legislative proposals to advance digital assets policy. This report must include a proposed Federal framework for the issuance and operation of digital assets, including stablecoins, and evaluate whether establishing a national digital assets stockpile is possible.
This article first appeared on Lexology. You can find the original version here.
