UK Cryptocurrency Firms Encounter High Rejection Rates in FCA Registration

Cryptonews John Brightwater September 5, 2024

UK Cryptocurrency Firms Encounter High Rejection Rates in FCA Registration

In the past fiscal year, a mere fraction of cryptocurrency firms in the United Kingdom successfully obtained licensing under the nation’s stringent anti-money laundering regulations. According to the annual report recently released by the Financial Conduct Authority (FCA), out of the 35 applications submitted during the twelve-month period concluding on March 31, only four firms received approval. The FCA revealed that an overwhelming 87% of cryptocurrency registrations were either rejected, withdrawn, or denied.

This notable rejection rate is consistent with a trend observed since the FCA began its oversight of cryptocurrency sector registrations in January 2020. To date, of the 359 applications received since the commencement of this regulatory process, only 44 firms have managed to successfully register, demonstrating the rigorous evaluation standards enforced by the FCA.

The importance of this situation cannot be understated. The FCA has concentrated its efforts on registering firms in accordance with anti-money laundering legislation while awaiting new legislative frameworks that would enhance its authorization powers over cryptocurrency enterprises operating within the UK. However, these proposed enhancements may face delays, particularly in light of the recent Labour government’s decision to pause initiatives related to cryptocurrency regulation.

The registration process has attracted scrutiny due to reports from some denied applicants regarding prolonged waiting periods, insufficient feedback, and perceptions of inequitable treatment by the regulatory body. In response, the FCA maintains that it provides clear expectations and guidance to firms regarding acceptable practices and the requirements for registration.

Among the few firms that successfully navigated this challenging process were BNXA, a PayPal UK affiliate, and Komainu, a collaborative venture in crypto custody involving Nomura.

Looking ahead, the forthcoming Benzinga Future of Digital Assets event, scheduled for November 19, aims to delve into these pressing issues, uniting industry leaders, regulatory authorities, and innovators to discuss the future of cryptocurrency regulation and explore avenues for harmonizing innovation with compliance amidst the evolving landscape of digital assets.