Tech

Crypto-firms are facing downloads from the UK as the FCA registration deadline approaches

New Bitcoin token, photographed on a 10 pound note.

Matt Cardi | Getty Images

LONDON – A number of cryptocurrency companies may be forced to close their businesses in the UK if they do not register for financial control before a key deadline next week.

As of March 31, firms providing crypto-services in the UK must be registered with the Office of Financial Control, which is tasked with monitoring how firms with digital assets fight money laundering.

Last year, the regulator extended the term, allowing firms on the interim register to continue trading until they seek full permission – it will close after the expiration date. The FCA said many crypto companies withdrew their bids because they did not meet required anti-money laundering standards.

With just a few days to go, the fate of the companies on the temporary register, including the $ 33 billion revolving technology firm Revolut and Copper, is a crypto startup advised by former UK Treasury Secretary Philip Hammond. balance.

“Complete catastrophe”

Many industry insiders have expressed frustration with the way the FCA handles the crypto registry.

One lawyer who advised cryptocurrencies on their applications said the regulator was slow to approve the application and often did not respond, as repeated by other sector figures.

“The process has been a complete disaster for the FCA,” a CNBC lawyer said, speaking on condition of anonymity because of the sensitive nature of the issue.

A FCA spokesman said he had so far approved only 33 applications from crypto firms. More than 80% of the firms it has evaluated to date have either withdrawn their applications or been rejected.

“We have seen that a large number of companies with cryptocurrencies that have applied for registration do not meet the standards to ensure that firms are not used to transfer and disguise criminal assets,” the spokesman said.

“Firms that do not meet the expected benchmark can withdraw their application. Firms that have decided not to withdraw have the right to appeal our decision to refuse, including in court.

Why it matters

Gemini, a crypto exchange run by Tyler and Cameron Winklevoss, was one of the first firms to receive FCA approval.

Blair Halliday, head of Gemini in the UK, said the licensing regime is important because it gives customers confidence that they are dealing with a firm that has passed strict scrutiny.

“Obtaining crypto asset registration was a critical step for crypto in this country,” Halliday told CNBC. “This has given firms that really want permission from regulators to demonstrate something as a key difference.”

Lavan Tasaratakumar of the Crypto Industry Association Global Digital Finance said the process was “very disappointing”.

“Basically, it was too slow,” Tasaratakumar said, adding that the FCA is dealing with a “huge backlog” of applications to the registry.

And some companies are still withdrawing their applications.

This includes B2C2, a London-based cryptocurrency firm that has recently been released from the FCA’s temporary register. On Monday, all spot trading activities of B2C2 were transferred to the American division of the company. The firm said its derivatives business is not affected as it is run by a subsidiary authorized by the FCA.

“We strive to ensure that this step causes as few failures as possible, and we work closely with our customers to ensure that they continue to have a continuous trading experience with us,” a B2C2 spokeswoman told CNBC via Telegram.

Firms whose applications have been rejected by the FCA can appeal, but the process is lengthy and may be required in court.

Recently, the tribunal sided with the FCA’s decision to reject the application from the cryptocurrency exchange Gidiplus.

Brexit dividends?

Mauricio Magaldi, director of global crypto strategy at consulting firm 11: FS, said the UK’s current regulatory direction puts the country at risk of falling behind the US, the European Union and other regions.

President Joe Biden has signed a decree calling on the government to coordinate control over digital currencies, while EU lawmakers recently rejected a proposal that would effectively ban bitcoin mining in the bloc.

“While key jurisdictions identify opportunity and risk, the UK emphasizes risk,” Magaldi told CNBC. “Moving too fast and too narrow, rules and deadlines create barriers for crypto firms that could potentially push them out of the UK market.”

Industry fears that this could put the UK at a disadvantage at a time when it is struggling to become a world leader in financial innovation after Brexit. The country is developing a thriving tech industry, which attracted nearly $ 12 billion in investment last year.

But fast-growing financial technologies such as Revolut and Copper may soon be forced to suspend their cryptocurrencies in Britain and go offshore if they do not make the full register. Both companies declined to comment when contacted by CNBC.

Firms such as PayPal and Coinbase, which sell crypto services in the UK through foreign subsidiaries, will not be affected.

Crypto-firms are facing downloads from the UK as the FCA registration deadline approaches

Source link Crypto-firms are facing downloads from the UK as the FCA registration deadline approaches

Back to top button