“An unprecedented 80% of the rest, that is 160 out of 200 British crypto companies have been asked to withdraw. The impact for those companies is that they will have to operate off-shore.”
The Financial Conduct Authority has intervened at the 11th hour to allow crypto asset firms in the UK who are appealing the regulator’s decision or have unusual wind-down requirements to continue trading on its temporary register.
The deadline for a final decision on approval had been set for 31 March, 2022, but the UK’s financial watchdog came under heavy fire in recent days as crypto firms and lobbies said the regulator was pushing them offshore.
Several leading players within the crypto space – including Copper, Blockchain.com, and Revolut – are still registered under the FCA’s temporary regime, which leads to uncertainty for the industry.
“We have concluded our assessments, and the TRR will close on 1 April, for all but for a small number of firms where it is strictly necessary to continue to have temporary registration. This is necessary where a firm may be pursuing an appeal or may have particular winding-down circumstances”, said the FCA.
A dozen firms currently occupy the TRR and more than 100 crypto firms applied for registration with the FCA once the government body became the authority with oversight over AML and CFT in the space. To date, 33 have been approved and more than 60 have been rejected or withdrew their applications.
Ian Taylor, Executive Director at CryptoUK, the UK’s independent crypto industry association, criticized the UK’s regulator: “The FCA has stated that it is given the 12 crypto firms still awaiting approval a period of time to either withdraw or appeal the FCA decision that they had not met the required standards.
“However, “. This means that there will be no consumer oversight if a UK citizen buys products from an online business domiciled in Malta, for example as they may still sell their services into the UK.
“Consumers will therefore have no recourse from the regulator, as the firm will operate outside the UK jurisdiction, which is bad for British consumer protection. This will also result in thousands of job losses at all of those 160 British crypto companies.
“This could also have another negative effect, in terms of illicit finance and sanctions avoidance. If the companies withdraw and move to less advanced regulatory environments, they will not be required to conduct globally accepted standards with regard to AML, KYC and transaction monitoring.
“It is unusual for the FCA to offer little support to companies trying to comply with their requirements. We need more transparency and guidance on best practice from the FCA so that companies that are already 90% compliant can be supported in reaching 100%.”