Crypto companies seeking to operate in the United Kingdom have until Thursday to get the Financial Conduct Authority‘s (FCA) clearance. Only 33 companies have cleared the regulator’s scrutiny so far.
After becoming the country’s anti-money laundering and counter-terrorist financing supervisor for the crypto business at the beginning of the year, the FCA announced a temporary scheme in December 2020. More than 100 firms sought registration and a total of 60 firms have either been denied permanent registration or have had their petitions withdrawn.
On Wednesday, the FCA published an update saying that:
“The Temporary Registration Regime (TRR) will close on 1 April, for all but for a small number of firms where it is strictly necessary to continue to have temporary registration.”
The prospects for the 13 remaining companies in the Temporary Registration Regime (TRR) were clouded by the FCA’s announcement on Wednesday that the March 31 deadline would be extended.
Is the FCA justified in turning down crypto firms? Is there a loophole?
Many in the sector believe the FCA has taken a risk-averse approach to the approval process, which in their opinion is totally unnecessary.
Among those who are currently awaiting a decision are Copper, a crypto services provider for institutions, Revolut, a fintech startup with a $33 billion valuation that enables cryptocurrency buying, and crypto exchange and digital wallet provider Blockchain.com, which is reputedly valued at $14 billion.
Firms that are regulated in different jurisdictions can rotate their operations to continue doing business from another country. Wirex, a crypto payments service, announced earlier this week that it had withdrawn its application and would instead serve U.K. customers through a subsidiary based in Croatia.
However, not every firm has such options.
An anonymous (on request) CEO of one of the firms preparing to use an overseas jurisdiction, said;
“They’re screwed, I think, unless they can spin up a new entity in an unregulated area, which they might do.”
Another option is to seek legal action, as Gidiplus, a bitcoin ATM operator, did in an attempt to overcome the FCA’s rejection of its application. The judge dismissed the lawsuit because there was insufficient information as to how Gidiplus would conduct its business in a broadly compliant manner.
Blockchain.com’s CEO Peter Smith is of the opinion that the U.K. has “fallen behind” due to its unnecessarily strict registration procedure.
The fate of about a dozen firms is currently in limbo with regards to their future in the United Kingdom.