- The Financial Conduct Authority has not registered any cryptocurrency businesses for six months.
- The regulator says the companies are failing to meet its anti-money laundering standards.
- However, she works with companies on compliance.
A version of this story appeared in our The Guidance August 26 newsletter. Sign up here.
General manager, Joanna here.
The industry’s dreams of turning the UK into a cryptocurrency haven have stalled as the Financial Conduct Authority has not approved any cryptocurrency businesses for six months.
When now-defenestrated Prime Minister Rishi Sunak was Chancellor of the Exchequer in 2022, he pledged to transform Blighty into a “global crypto asset tech hub”.
This promise now seems very distant.
The last entity registered by the Financial Conduct Authority was institutional market maker Portofino Technologies in February, according to the regulator’s register.
Register data updated on 1 August shows the FCA received 34 applications in the past 12 months, four of which were accepted.
Besides Portofino, companies approved during this period were crypto bank Banxa UK, payments giant PayPal and custodian Koimanu.
Join the community to receive our latest stories and updates
Of those 34 initial applications, 16 withdrew their applications before they were approved or denied.
Firms must register with the FCA if they want to offer services such as cryptocurrency trading or providing wallets.
But lobbyists complain that the FCA’s rules are prescriptive, onerous and confusing, particularly those covering marketing to consumers.
Binance and PayPal have both suspended their cryptocurrency services in the UK, citing so-called promotion rules.
The FCA this month published a report on how crypto firms have complied with various aspects of the rules, which came into force in October.
“For many UK crypto-asset companies, this is the first conduct regulation they have had to comply with, and they have been forced to invest in significant technical developments,” the report said.
Cryptocurrency businesses must be ‘fit and proper’
The FCA defends its low registration rate, saying most cryptocurrency businesses fail to meet its anti-money laundering standards.
“We expect firms to be competent and appropriate and to have adequate systems in place to identify and prevent the flow of money from crime,” an FCA spokesperson said. DL News.
The regulator has a strict consumer protection mandate, and the standards it holds companies to “are essential to protecting people and the integrity of our financial system,” the spokesman said.
After all, losses on cryptocurrency investments are not eligible for government compensation like bank deposits are.
Contact me at joanna@dlnews.com.
