FCA crypto licensing regime too much for many cryptocurrency businesses as 13 additional companies withdraw applications | Withdrawals up over 25% in June | FCA has already undertaken action against Binance.
As the British Financial Conduct Authority continues to work through the backlog of cryptocurrency company applications, the hoops businesses are being forced to jump through appears to be a little too arduous for many of them, with Reuters reporting 13 additional companies withdraw applications in the last few days.
This takes the total number of withdrawn applications to 64, up from the 51 crypto firms which pulled their applications at the start of June 2021, as reported by Cointelegraph.
The FCA has been in charge of overseeing AML (Anti Money-Laundering) compliance procedures in the UK since January 2020, and when it first took over, an FCA temporary registration scheme for crypto businesses was launched, with a 12 month time limit initially imposed for companies to undergo full registration. However, the scheme has been massively oversubscribed, and a backlog of licensing applications have forced the agency to extend the temporary regime from July 2021 to March 2022.
The UK government has said it’s mandate to the FCA is required to prevent criminal activities, money laundering and the financing of terrorist activities, but it may be that the stringent red-tape ultimately has the net effect of driving many crypto businesses out of the United Kingdom, which would be a blow to the country, particularly as the Tory government is currently focussed on attracting Fintech firms to the City of London.
The companies which exit the licensing process must under UK law cease all crypto-related activities or face legal action and potentially large fines, although there is some speculation that some of these firms may be able to continue offering services if they are not covered under the agencies AML mandate.
The FCA issued a warning and advisory to UK consumers earlier in the month about over 100 unregistered cryptocurrency companies operating in the UK, and earlier this week, leading crypto exchange Binance was told it must cease all regulated activities in the country.