UK’s FCA Explains Why It Only Gave Regulation Green Light to 15% of Crypto Firms

[ad_1]

Despite plans to turn the region into a bustling crypto hub, the UK’s financial watchdog says it has only greenlighted 41 out of 300 applications from crypto firms seeking approval regulations to date.

The UK’s Financial Conduct Authority (FCA) implemented the new cryptocurrency-focused regulations on January 10, 2020, to oversee companies operating in the sector and ensure they face the same fight. against money laundering (AML) and the financing of terrorism. (CTF) as businesses in traditional financial markets.

A statement from the FCA revealed that of the 265 applications that were determined, only 15% of those applications were approved and registered, while 74% of companies denied or withdrew their application, and 11% were denied. Another 35 claims have yet to be determined.

Although the FCA did not expressly state the cause of rejected or withdrawn applications, it did provide information on good and poor quality applications.

Among the most comprehensive applications were a detailed description of the company’s business model, roles and responsibilities of business partners and service providers, sources of liquidity, cash flow charts, and an overview of policies and systems in place to manage risk. , says the report.

A flowchart that helps businesses understand whether they need to register with the FCA. Source: FCA

Incomplete applications were more apparent when companies used the app to promote their products and services, especially in cases where the application process was still ongoing:

Applicant websites and marketing materials must not include language that creates the impression that applying for registration is a form of endorsement or recommendation by the FCA.

The report suggests that some companies may have had their apps taken down if they couldn’t show they had enough blockchain compliance resources in place to monitor on-chain transactions.

The FCA has also doubled down on its stance against money laundering, requiring all companies to appoint a money laundering reporting officer who is fully involved in the application process.

The FCA also pointed out that even for companies whose registrations have been approved, this approval does not mean that they are no longer exempt from obligations:

Applicants should acknowledge that registration is not a one-time formality or tick-box exercise without any further obligation or interaction with the FCA.

These comments should help applicants as they prepare their application for registration and help make the process as easy and efficient as possible, the memo says.

Some of the digital asset companies that have registered with the FCA so far include Crypto.com, Revolut, CEX.IO, eToro, Wintermute Trading, DRW Global Markets, Copper, Globalblock, Moneybrain and Zodia Markets.

Related: UK Authorities Divided Over Ban on Sale of Crypto Investment Products

As many companies provide international services, the UK FCA has also confirmed that it is now working with other state agencies around the world, including the US Securities Regulator and the US Securities Regulator. Commodity Regulators to strengthen regulation if necessary.

The FCA has repeatedly pointed out that failure to register before doing business can result in criminal charges.

[ad_2]