UK Crypto Winter? FCA’s Stringent Registration Process Leaves Firms Out In The Cold

The UK’s Financial Conduct Authority (FCA) has unveiled its stringent vetting results for crypto asset businesses, revealing a mere 13% approval rate.

This data, stemming from the introduction of the 5th Anti-Money Laundering Directive (5MLD) in January 2020, highlights the challenges faced by crypto companies in navigating the UK’s rigorous regulatory landscape.

From January 2020, the FCA received a total of 291 applications from crypto asset businesses seeking registration under the 5MLD.

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Of these, only 38 firms have been granted registration, indicating a stringent vetting process and a 13% approval rate.

While the FCA emphasized that they do not technically “decline” applications, they have refused 5 applications based on non-compliance with the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs).

Furthermore, 22 applications faced rejection due to their failure to provide the minimum information mandated by Regulation 57 of the MLRs.

A notable 155 firms chose to withdraw their applications during the registration process.

The reasons for these withdrawals are multifaceted.

Some firms lacked the necessary information, while others did not meet the specific criteria for conducting business in the UK or did not align with the definitions set for crypto asset exchange providers or custodian wallet providers. Additionally, some firms withdrew their applications in anticipation of a likely refusal or due to non-compliance with the MLRs.

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