More than 50 crypto companies have withdrawn their applications to conduct business in the UK due to demanding requirements set by the Financial Conduct Authority (FCA).
Applicants Not Up to Scratch?
Early in June, the FCA released a report concerning a “significantly high number” of crypto firms that had been warned for not meeting anti-money laundering (AML) standards. This legislation is intended to stop criminals from hiding money used for or gained from criminal activities.
A significantly high number of businesses are not meeting the required standards under the Money Laundering Regulations. This has resulted in an unprecedented number of businesses withdrawing their applications.
FCA
Only 5 crypto asset firms have been admitted to the FCA’s formal register so far. They reportedly had 90 pending registration requests, of which 51 had withdrawn in early June and another 13 have since followed suit.
The FCA had previously issued a notice to UK consumers to inform them there were 111 unregistered crypto companies operating in the country.
Registration Period Extended
At the start of the new year, it was announced that companies that failed to meet the FCA’s AML requirements would be forced to refund all customer deposits and stop services until they could comply with the requirements set up by the regulatory agency.
The FCA has extended the temporary registration regime to 31 March, 2022. This allows businesses that have applied for registration to continue operations while awaiting the outcome of the assessment.
Additionally, there are schemes in the UK that help investors if a company were to go bust, but these don’t apply to those in the crypto industry. This law could possibly sway investors against putting their money in crypto.
It is unlikely that consumers will have access to the Financial Ombudsman Service or Financial Services Compensation Scheme, irrespective of whether a firm has temporary or full registration.
FCA
In January 2020, the FCA became the official AML regulators for the UK’s crypto market. The FCA has since taken action against some major platforms, including Binance. Apart from regulators in the UK and Japan, Canadian authorities have also issued warnings to Binance.
Binance must cease any financial promotions in the UK, but in the meantime its trading services have not been affected.
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