As a seasoned researcher who has delved into the intricacies of regulatory policies and their impact on various industries over the years, I find myself increasingly perplexed by the UK’s Financial Conduct Authority (FCA) and its approach towards crypto firms.
The Financial Conduct Authority (FCA) often experiences a significant rejection rate when reviewing applications from crypto companies, and it can take a considerable amount of time to complete the processing of each submission.
In the past year, approximately 87% of cryptocurrency companies have been denied licenses by the UK’s main financial oversight body, the Financial Conduct Authority, mainly because their anti-money laundering and fraud prevention measures are deemed insufficient.
According to the Financial Conduct Authority’s Annual Report for 2024, approximately 87% of cryptocurrency registrations either didn’t proceed due to lax anti-money laundering measures, were rejected, or withdrawn last year. However, it was also noted that 44 crypto companies have now registered for anti-money laundering purposes. Out of these, 35 applications were approved, while 15 were withdrawn and 9 were denied within the past 12 months.
Crypto Firms Disinterested in Registering in the UK
1) Cryptocurrency businesses have shown reluctance to register within their jurisdiction, citing a too-stringent stance taken by the FCA over time. According to a Finextra report, this trend has resulted in a 51% decrease in crypto firms seeking registration with the regulator during the past three years. In the first quarter of 2024, only seven applications were submitted. Additionally, 186 applications that had initially been submitted were subsequently withdrawn over the past three years.
Furthermore, the National Audit Office in the UK has highlighted a shortage of experts in cryptocurrency fields among the staff at the Financial Conduct Authority (FCA). This skill gap has resulted in longer-than-expected processing times for their application reviews. On average, it takes approximately 459 days to complete an application review. Given the number of applications they have handled, the FCA has effectively dedicated roughly 25 years’ worth of workforce hours to this process.
Bret Hillis, a partner at Reed Smith, stated, “Companies won’t hold back forever for authorization, especially if another region appears to have a faster procedure, offering access to a market that is similar in size or even larger.” In essence, he warned that the UK’s cryptocurrency market could face competition from an expanding number of crypto-friendly regions outside and slow approval processes within.
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2024-09-08 15:18