A plethora of crypto businesses in the United Kingdom may be forced to shut down if they fail to comply with the financial watchdog before a major deadline next week.
Firms providing crypto services in the United Kingdom must register with the FCA or Financial Conduct Authority, which is in charge of supervising how cryptocurrency enterprises prevent money laundering, as of March 31st.
In 2021, the government extended the deadline for enterprises on an interim register to keep trading while seeking valid permission; once the deadline passes, the temporary register would be closed. Many crypto businesses have retracted their applications, according to the FCA, since they did not match the necessary anti-money laundering criteria.
With only a few days until the new deadline, the status of companies on the temporary registry, such as Revolut, a $33 billion fintech firm, and Copper, a new cryptocurrency business with former UK Minister Of Finance Philip Hammond as a consultant, is in jeopardy.
A Disastrous Outcome
The FCA’s management of the crypto registry has been criticized by many industry experts.
Furthermore, the regulator, according to some lawyers assisting crypto firms with its applications, has been slow to accept application forms and is sometimes inattentive, a sentiment mirrored by other players within the industry.
The FCA’s side of the procedure has been a complete disaster, according to lawyers, who spoke on the matter and asked to remain anonymous owing to the sensitivity of the case.
Thus far, only 33 crypto companies’ applications have been authorized by the FCA, according to a representative. To date, upwards of 80% of the companies it has evaluated have either retracted their requests or been denied.
According to the spokesperson, they have observed a large number of cryptocurrency businesses asking for registration to help guarantee enterprises aren’t moving or masking criminal finances.
Companies that do not satisfy the minimum requirements may retract their application. Firms that refuse to revoke have the opportunity to appeal the refusal, which includes going to court.
Why Is This Important?
Cryptocurrency exchange, Gemini, was one of the first to be authorized by the FCA.
The license structure is vital, according to Blair Halliday, Gemini’s head of the UK, since it assures clients that they’re engaging with a company that has been well vetted.
Putting a cryptocurrency registry in place, according to Halliday, was an essential part of digital assets in the country and globally. It offered companies who genuinely want to pursue regulatory clearances something to brag about as a fundamental distinction.
According to other industry experts, this entire process has caused a lot of hassle and frustration.
There is also a huge backlog of applications that are still being handled by the FCA.
Even now, some businesses are retracting applications.
B2C2, a London-based cryptocurrency exchange company, just removed itself from the FCA’s provisional registry. Moreover, B2C2’s live trading activity has been relocated to the firm’s U.S. entity from Monday. The company’s derivatives activity, which is managed by an FCA-authorized affiliate, is unaffected.
A B2C2 representative stated that they are committed to making sure that this shift causes as little disturbance as possible. They are working closely with clients to guarantee that they continue to enjoy a flawless trading experience with them.
Companies that have had requests denied by the FCA may appeal, but it is a lengthy procedure that may require going to court.
The FCA’s decision to reject a request from the cryptocurrency exchange Gidiplus was recently upheld by a court.
Effects of Brexit
The existing legislative trajectory of the United Kingdom puts the nation at risk of sliding behind the United States, the European Union, and other countries.
President Joe Biden authorized an executive order asking for government coordination on digital currency governance, while EU parliamentarians already rejected a plan to effectively outlaw Bitcoin mining in the region.
While other big countries are recognizing both the potential and the danger, the United Kingdom is emphasizing the risk. Rules and timetables that move too quickly and too narrowly create barriers for crypto enterprises, potentially driving them out of the UK market.
The Bottom Line
The United Kingdom is one of the major financial players globally. By them reacting to crypto exchanges in this way, it could have major repercussions for digital assets all over the world. An eye should be kept on just how much of an effect this may have.
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