• The UK Financial Conduct Authority (FCA) has only approved 15% of the 300 crypto firm registration applications it has received.
• The FCA provided feedback on “good and poor quality” applications, outlining what is needed for a complete application.
• 74% of firms either refused or withdrew their application, and 11% were rejected.
The United Kingdom’s financial watchdog, the Financial Conduct Authority (FCA), has received 300 applications from cryptocurrency firms seeking regulatory approval, but has only approved 15 percent of them. This comes as part of the FCA’s implementation of new cryptocurrency-focused regulations on Jan. 10, 2020, to supervise businesses operating in the sector and to ensure that they’re subject to the same Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) regulations as firms in traditional financial markets.
The FCA statement reveals that of the 265 applications that were “determined”, only 15 percent of these applications were approved and registered, while 74 percent of firms either refused or withdrew their application, and 11 percent were rejected. Another 35 applications are yet to be determined.
The FCA also provided feedback on “good and poor quality” applications, outlining what is needed for a complete application. This includes a detailed description of the firm’s business model, the roles and responsibilities of business partners and service providers, sources of liquidity, flow-of-funds charts, and an outline of the policies and systems set in place to manage risk.
Incomplete applications often lacked some or all of the elements of a complete application. Some of the common problems included not providing a detailed description of the firm’s business model, the roles and responsibilities of business partners and service providers, and a flow-of-funds chart.
The FCA emphasizes that the application process is an important part of assessing the suitability of firms to provide services in the cryptocurrency sector. Furthermore, they remind firms that it is their responsibility to ensure that they comply with applicable laws and regulations and to update their applications if there are any changes to their business models.