The UK Financial Conduct Authority (FCA) reported an 87% failure rate among crypto firms seeking licensing under money laundering regulations in the latest fiscal year. Out of 35 applications submitted between April 2023 and March 2024, only four companies secured approval. Since the FCA began overseeing the sector’s compliance in January 2020, only 44 firms out of 356 applications have successfully registered. Industry participants have cited long wait times, minimal feedback, and inconsistent treatment by the FCA as challenges, leading some companies to abandon their applications or seek registration in more crypto-friendly jurisdictions.
Criticism of the rejected applicants includes a lack of transparency and clarity in the FCA’s expectations. The regulator provides detailed guidance to help firms understand the requirements for registration, but many applications lack necessary components for a thorough assessment. Some submissions were deemed invalid due to poor quality or incomplete information. The FCA’s stringent standards aim to ensure compliance with anti-money laundering and counter-terrorist financing measures, but there is debate over whether the regulatory environment is too restrictive, potentially stifling innovation and pushing businesses offshore.
Looking ahead, the FCA is poised to gain more control over the crypto sector pending new legislation granting it the power to authorize companies to operate fully within the UK. However, this regulatory evolution may take time as the new Labour government has paused crypto-specific legislative plans. The FCA aims to balance stringent regulatory oversight with fostering a vibrant and innovative crypto industry. The regulator aims to assist potential applicants by providing comprehensive feedback on applications to improve the approval rate in the future. Aligning with the FCA’s expectations and maintaining compliance standards will be key for current and prospective applicants to secure a foothold in the UK market.
A survey by Zumo and Focaldata found that over a third of young adults in the UK view cryptocurrency as a key electoral issue. Many young adults believe politicians should prioritize the industry’s growth, with a significant percentage having directly invested in crypto. Young adults see digital assets as a potential long-term financial gain, indicating the need for an improved regulatory stance in the country. The interest in digital assets among young adults suggests a shift in the perception of cryptocurrency and highlights the need for regulatory improvements to meet the growing demand and interest in the sector.
Overall, the FCA’s report highlights the challenges faced by crypto firms seeking registration in the UK, with a high failure rate among applicants. The regulator’s stringent standards aim to ensure compliance with anti-money laundering and counter-terrorist financing measures but have also sparked debate over the regulatory environment’s restrictiveness. As the FCA works to balance oversight with fostering innovation in the industry, potential applicants can benefit from comprehensive feedback and guidance to improve their chances of securing approval in the future. The interest in digital assets among young adults underscores the importance of regulatory improvements to meet the growing demand for cryptocurrencies in the UK.
