Crypto firms face being booted from UK as FCA register deadline nears
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A novelty Bitcoin token photographed on a £10 note.
Matt Cardy | Getty Images
LONDON — A slew of cryptocurrency companies could be forced to wind down their business in the U.K. if they fail to register with the finance watchdog ahead of a key deadline next week.
Starting in March. 31. Crypto service providers in Britain are required to register with the Financial Conduct Authority. It is charged with monitoring how crypto asset firms fight money laundering.
Last year, the regulator extended the deadline allowing firms on a temporary register to continue trading while they sought full authorization — it’ll close once the deadline passes. Many crypto firms had withheld their applications after the FCA found they did not meet anti-money laundering requirements.
Now, with just days to go until the new deadline elapses, the fate of firms on the temporary register — including $33 billion fintech firm Revolut and Copper, a crypto start-up that counts former U.K. Finance Minister Philip Hammond as an advisor — hangs in the balance.
“A complete disaster”
Numerous industry professionals have voiced dissatisfaction with FCA’s management of crypto register.
A lawyer representing crypto-company applicants said that the regulator was slow in approving applications, and often not responsive. This sentiment is shared by others within the sector.
CNBC’s lawyer spoke on condition of anonymity to describe the FCA’s failure to handle the case.
A spokesperson for the FCA stated that it had approved 33 applications from crypto companies so far. Over 80% of all the companies it has evaluated to date have either withdrew their applications, or rejected them.
The spokesperson stated that a large number of cryptoasset companies applying to register have not met the standards to ensure they aren’t used to conceal or transfer criminal funds.
Firms who do not meet this benchmark may withdraw their applications. Firms that do not wish to withdraw may appeal the decision of the court to reject them.
It is important
Gemini, a crypto-exchange operated by Tyler Winklevoss (Cambridge Winklevoss), was one of the first to be approved for FCA approval.
Blair Halliday is Gemini’s U.K. head. He said that licensing gives customers assurance that the firm has been subject to rigorous inspection.
Halliday said that creating a registration for crypto assets was an important step in crypto’s development in the country. The registration gave companies that have the desire for approval a way to show that they are a distinct advantage.
Lavan Thasarathakumar, CEO of Global Digital Finance, said that there have been many frustrations in the crypto industry.
Thasarathakumar explained that “fundamentally it has been too slow”, adding that the FCA had been handling a “huge backlog,” of applications to the register.
Some companies withdraw their applications.
This includes B2C2, a London-based crypto trading company, that recently resigned from the FCA’s temporary register. All spot trading activities at B2C2 have been transferred to its U.S. subsidiary since Monday. According to the firm, its derivatives business remains unaffected because it is managed by an FCA-authorized subsidiary.
According to B2C2, a spokeswoman for the organization stated that they are determined to minimize disruption and were working with clients to make sure their trading experiences are seamless.
If a company has had its application rejected by FCA, it can appeal. But the process is lengthy and may need to be re-opened before the FCA makes a decision.
Recently, an arbitral ruled in favor of the FCA’s rejection of Gidiplus’s request.
Brexit dividend?
Mauricio Magaldi (global strategy director crypto, 11:FS), said the U.K. is at high risk due to its current regulatory orientation. This puts them at risk of losing out on the U.S., European Union, and other regions.
President Joe Biden has signed an executive orderWhile EU lawmakers have recently demanded coordination between the governments on digital currency oversight, they also called for greater government coordination voted down a proposalThat would have effectively prohibited bitcoin mining in the bloc.
Magaldi said that “while major jurisdictions see the opportunity and risk, the U.K. stresses the risk,” CNBC reported Magaldi. By moving too quickly, too slow and with too tight timeframes, crypto firms face hurdles that could lead to them being displace from the U.K. market.”
This could be detrimental to the U.K. as it seeks to remain a world leader in financial innovation following Brexit. It is the home of a vibrant fintech sector that attracts many foreign investors. nearly $12 billion in investmentLast year.
Revolut and Copper, two fast-growing fintechs, may be forced to shut down crypto operations in Britain and migrate offshore if they are not included on the full Register. CNBC reached out to both companies for comment.
These firms are like PayPalAnd CoinbaseThese companies, which are able to sell crypto services in Britain through their overseas subsidiaries, won’t be affected.
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