- The UK’s financial regulator took almost 460 days to process crypto firms’ registration in the last three years.
- Due to the untimely registration process, crypto firms’ applications have dwindled in the last year.
- Almost 90% of crypto firms waiting to be registered had weak fraud and money laundering controls.
Surprisingly, the UK’s Financial Conduct Authority (FCA) took over 459 days in the last three years to process new crypto firm registrations despite spending over 25 years of its workforce on application processing. However, the long wait has caused crypto firms to be wary of opting for markets outside the UK.
Crypto Firms Show Interest In Other Markets Aside From the UK
Only 7 cryptocurrency companies sought FCA registration in the first quarter of 2024, contributing to a total of 29 applications between May 2023 and April 2024. This is down from 42 applications the previous year and 59 the year before that. Moreover, 186 applicants withdrew their forms in the last three years.
The financial watchdog’s long 459-day wait has put off many crypto firms, contributing to the drop in applications.
Reed Smith’s Partner Brent Hill comments, “It does seem that even though approval times are falling, the time taken to grant approval remains something of a drag on the UK’s broader ambition to become a crypto hub.”
He added that if crypto processing applications are dwindling due to waiting frustrations, it should warn of London’s competitiveness.
In December, the UK National Audit Office also criticized the financial authority for its shortfalls in qualified staff needed for effective regulatory enforcement.
The FCA Denied Close to 90% of Crypto Registration Applications
Almost 90% of cryptocurrency firms applying for registration in the last 12 months in the UK fell short of the FCA’s standards. The financial watchdog argued that most of the denied crypto firms had gaps in their fraud and money laundering protocols.
The financial watchdog found only 4 crypto firms eligible for registration in the last 12 months out of 35 applications. Fifteen applications were also withdrawn, and 9 were rejected.
In their report, the FCA stated that they had rejected submissions that lacked essential components required for assessment or where the quality of key components was insufficient, rendering the submission invalid.
The FCA added that it had established a new “financial promotion perimeter” for cryptocurrency advertising in June 2023 to guarantee that crypto ads in the UK were transparent, equitable, and not deceptive. The regulator also noted a rise in public awareness of crypto scams, recording a 5% surge in people calling in scams from last year.
The FCA’s long processing time puts off crypto firms in the UK that are waiting to be registered.
