UK Crypto Regulations: A Stricter Approach
The Financial Conduct Authority (FCA) in the UK is taking a hard line on cryptocurrency firms. The regulator’s 2024 annual report reveals that nearly 90% of crypto firms applying for registration in the UK over the past year have been rejected.
The FCA’s Tough Stance
This high rejection rate is attributed to firms failing to meet regulatory standards, especially in areas like fraud prevention and anti-money laundering protocols.
Out of the 35 crypto firm applications submitted in the last 12 months, only four were approved. Fifteen were withdrawn, and nine were rejected outright due to insufficient compliance with regulatory requirements.
- Only Binance, PayPal, Nomura, and Komainu received approval.
- The FCA has stated that over 87% of crypto registrations were withdrawn, rejected, or refused due to weak money laundering controls.
Concerns About UK’s Competitiveness
Some industry experts are concerned that the strict regulatory environment in the UK could drive crypto firms to seek more favorable jurisdictions.
- Reed Smith, an international law firm, has warned that lengthy registration processes and a perceived lack of support from the FCA could make London less appealing to crypto businesses.
- Since 2021, 186 applications have been withdrawn, suggesting that some firms may be abandoning their attempts to register in the UK.
The FCA’s Justification
The FCA’s stance on crypto firms comes amidst increased scrutiny on the cryptocurrency sector, following several high-profile bankruptcies in 2023. The FCA introduced new regulations requiring all crypto firms to register with the financial watchdog and have their marketing materials approved by an FCA-authorized entity.
The FCA’s goal is to protect consumers by ensuring that crypto firms operate within a framework that minimizes risks and promotes transparency.
- The FCA has warned both domestic and international exchanges operating in the UK that non-compliance could result in severe consequences, including unlimited fines and imprisonment.
