Despite its goal to become a crypto hub, the United Kingdom (U.K.). is still strict with its crypto regulations. Today, the U.K. financial conduct authority disclosed its regulatory approval of crypto firms, and out of the 300 that applied for approval, only 41 were cleared. Rejected applications were referred to law enforcement agencies.
The U.K.’s FCA is a regulatory body focused on regulating the financial markets and companies in the region. The regulator aims to protect consumer funds and ensure legal and financial systems. Given its ability to authorize and oversee firms in the financial market, the FCA has an upper hand to either approve or disapprove the operation of crypto firms in the U.K.
Many Registered, But Few Were Chosen
Notably, out of the 300 crypto firm registration applications the financial watchdog received, only 41 applicants were shortlisted. At the same time, some of the rest were referred to law enforcement agencies for an investigation into a financial crime or a direct link to organized crime.
Sarah Pritchard, executive director of markets supervision, policy, and competition at the FCA, noted in a letter to the Treasury Select Committee:
Overall, in the small number of cases where we have identified likely financial crime or direct links to organized crime we have referred these to law enforcement agencies. Some of those law enforcement investigations remain ongoing.
Furthermore, the new cryptocurrency-focused regulations by the FCA, which crypto firms are thriving to obtain approval was, initially introduced two years ago on Jan. 10, 2020, to supervise businesses operating in the sector and to ensure that they comply with the same Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) regulations as firms in the traditional financial markets.
Approval Doesn’t Mean Exception For Crypto
Though the FCA did not give a solid reason behind the disapproval of some applications, the regulator did reveal some reviews showing its feedback on “good and poor quality” applications. Part of the disapproved applications include companies who used the application to promote their products and services, specifically when the application process was still in progress. The report noted:
Applicants’ websites and marketing material must not include language that gives the impression that making an application for registration is a form of endorsement or recommendation by the FCA.
The report also disapproved of companies’ applications that couldn’t prove the use of “sufficient blockchain-compliance resources to monitor on-chain transactions.”
At the end of the note, the FCA emphasized that firms that got approved are not exempted from obligations. FCA noted:
Applicants must recognize that being registered is not a one-off formality or a tick-box exercise without any further obligations or interaction with the FCA.
The FCA also stressed that the disclosure of the feedback is to assist applicants when preparing their application for registration and help make “the process as simple and efficient as possible.” While regulators continue to troop into the crypto market, companies and projects in the sector have demonstrated composure.
At the time of writing, the global cryptocurrency market capitalization still sits steady above the $1 trillion mark, down by only 0.3% in the last 24 hours.
Featured image from Unsplash, Chart from TradingView