UK Trends and Developments Contributed by: James Burnie, Kathryn Dodds, Nicky Androsov and Olga Antonova, gunnercooke llp
Bullet time Firms seeking to determine whether to obtain FCA authorisation to be able to continue to service the UK market are under some time pressure. Firms can apply for authorisation from 30 September 2026, and will need to ensure that their application is in by 28 Feb- ruary 2027. Firms that fail to submit an application in time will not be guaranteed continued access to the UK whilst their application is being determined, mean- ing that they have to stop UK operation pending their application being approved. Such approval may take time as the FCA deals with the backlog of applications that were submitted in time. Another reason for firms to seek to prioritise becom- ing FCA authorised is that the FCA is clearly taking on board feedback with respect to the regulations being put in place for the industry. As the new rules have been created at speed, it is important for firms to seek to actively engage with the FCA with respect to any issues, so that the FCA can properly consider its approach to novelties not envisaged at the outset of drafting the new rules. Firms that do not engage with the FCA risk being assessed when the rules are more entrenched, meaning that there is less appe- tite to take on board industry feedback. Whilst the existence of, for example, the sandbox, as well as the stated intent of the FCA to continue to engage with industry as markets develop, does mean that firms will still be able to seek to influence UK regulation, there may be less appetite to make changes once a gen- eral approach to regulation has become entrenched. Firms that seek to deploy atypical business models may therefore be subject to greater friction, meaning that there is additional pressure to simply conform their business models to general market practice, rather than seek to spend the resources required to shift the market to acknowledge the validity of their business model.
set up a general basis for co-operating. Particularly interesting here is the Berne Financial Services Agree- ment, which bilaterally allows UK and Swiss firms to access each other’s market on the basis of defer- ence – meaning that rather than requiring line by line of equivalence (which is slow and resource heavy to achieve), a general recognition of the general adequa- cy of each regulatory system is deemed sufficient to give market access. This approach, whilst nascent, provides a potential blueprint for the future develop- ment of the UK as a financial services (and potentially crypto-asset) hub. It will be interesting to see how the UK develops in this respect, as in light of global development we are see- ing an influx of investment into the UK, which could help support the development of the UK Web3 eco- system, whilst a more comprehensive regime involves a greater cost to comply with, as investment size increases the relative cost of compliance diminishes. An additional factor which may assist in this respect is that having a comprehensive regime early on means that it is less likely to substantially change over time – meaning that once the requirements are met, it is less likely that a regulatory shift will cause a com- pliant domestic market of firms to become inadvert- ently non-compliant. The regulatory certainty that this brings may well mean that firms are happy to pay the premium to obtain certainty compared to other juris- dictions which, whilst superficially cheaper to operate in, may in real terms be more expensive over time as their regimes become steadily more stringent, requir- ing firms to re-evaluate their position continuously.
714 CHAMBERS.COM
Powered by FlippingBook