From March 31, 2022, all companies operating cryptocurrency services must must be registered with the Financial Conduct Authority (FCA), on pain of being expelled from the United Kingdom. According to CNBC, most of them are not, because they do not meet anti-money laundering standards. They therefore risk expulsion.
Many fintechs, including Revolut, face eviction
A year ago, the Financial Conduct Authority had already extended the deadline to allow more companies operating cryptocurrency services to comply with the country’s new legislation. As of March 31, 2022, the FCA will carry out its threats. The authority specifies that many companies have not made their requests because they know that they do not meet the required standards in terms of anti-money laundering. A few days before the deadline, many companies are worried.
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Famous companies are concerned. This is the case of Revolut, a British fintech giant valued at $33 billion (the third largest fintech in the world). There is also Copper, a startup that exploits cryptocurrencies and which counts the former British Minister of Finance, Philip Hammond, as an adviser. These two companies are not certain that they will be able to continue to operate after March 31 and this is the case for most companies in the sector in the UK. Many industry experts have expressed frustration and displeasure with FCA’s handling of this case.
How is this new legislation perceived by the world of cryptocurrencies?
According to a lawyer advising several cryptocurrency companies, the regulator has been slow to approve applications and often unresponsive. A sentiment shared by other well-known figures in the sector. This lawyer even said that “the registration process was a total disaster on the FCA side”. The Financial Conduct Authority spokesperson said the authority has only approved 33 applications from cryptocurrency companies so far. 80% of requests were rejected or canceled because they did not meet the required standards.
According to the authority, the registration process revealed “that a large number of cryptocurrency companies applying for registration do not meet standards aimed at ensuring that companies are not used to transfer or disguise criminal funds. Companies that do not meet the expected criteria may withdraw their application. Companies that decide not to opt out have the right to appeal our opt-out decision, including in court.”.
Yet according to Gemini, one of the first companies validated by the FCA, this new legislation is extremely important. The cryptocurrency company believes that it “provides customers with the assurance that they are dealing with a company that has been rigorously reviewed. This step was very important for companies in our country. This allows companies that genuinely have the desire to seek regulatory approvals to have a differentiating point.”.