At the end of this month, the deadline to register with the UK’s Financial Conduct Authority expires, leaving many crypto firms at risk of being closed down.
Less than 20% of the applicants will make it
According to a CNBC report, the deadline to register with the FCA had already been extended in the last year, placing all crypto companies that have not received their license yet on a temporary register. That register will however close on March 31, meaning that all companies that are not fully registered cannot continue to operate legally in the United Kingdom.
The hurdles for receiving approval by the FCA are high, though, because of strict anti-money-laundering requirements. An FCA spokesperson said that only 33 applications have been accepted so far. 80% of the firms seeking FCA registrations have either been rejected or withdrew their application voluntarily. The spokesperson said that these companies were “not meeting standards there to help ensure firms are not used to transfer and or disguise criminal funds”, adding:
Firms that do not meet the expected benchmark can withdraw their application. Firms that decide not to withdraw have the right to appeal our decision to refuse, including through the courts.
Lawyer calls FCA registration “a total disaster”
According to CNBC, one lawyer, who wishes to remain anonymous, called the registration process “a total disaster from the FCA’s side of things”. In the past, that lawyer has advised crypto companies on their registration requirements, but stated that the FCA was often unresponsive and generally slow to approve applications.
Lavan Thasarathakumar, Government and Regulatory Affairs Director at Global Digital Finance, agrees that the registration process caused “a lot of frustration”, mentioning a huge backlog of applications still awaiting their final decision. But not everyone shares this sentiment. Blair Halliday, Gemini’s head of UK, noted:
Getting a crypto asset registration in place was a critical step for crypto in this country. It gave firms that really have that desire to seek regulatory approvals something to demonstrate as a key differentiator.
Gemini was one of the first crypto firms to be approved by the FCA. But the list of companies that still hang in the balance is long. It includes the $33 billion fintech firm Revolut, as well as Copper, a start-up backed by former Finance Minister Philip Hammond.