Regulatory scrutiny and compliance are key aspects of the crypto ecosystem. However, sharp criticism has met the recent registration process administered by the Financial Conduct Authority (FCA) in the UK, with just 13% of crypto companies receiving the green light for their applications. This information was brought to light amidst FCA’s latest disclosure that only 38 out of the 291 applications have been approved since January 2020.
Interestingly, the FCA’s registration process comprises hurdles too challenging for some, leading to firms voluntarily withdrawing their applications. Another setback for companies includes the stern warning from the FCA that any deficiency in the required information will result in rejection. Strict adherence to regulations such as the Money Laundering, Terrorist Financing, and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs) is also mandatory, leading to the refusal of typically five applications due to non-compliance. Lack of clarification according to Regulation 57 of the MLR results in rejection as well, with 22 applications already suffering this fate.
This rigorous process implemented by the FCA has led to both dismay and departure, with certain companies taking their business elsewhere. Take, for example, the case of Copper—a digital asset exchange that withdrew its application due to the overwhelming nature of the regulatory process and set up shop in Switzerland instead.
While the UK Prime Minister, Rishi Sunak, has voiced the need for the UK to embrace blockchain technology, critics argue that the government’s complex and bottleneck regulations may deter this vision. This hard-line regulatory approach includes the FCA’s proposed ban on crypto incentives—a move that would restrict cryptocurrency advertising and promotions—an action that has raised further objections.
Digital lobby group CryptoUK warns that the FCA’s rigidity could potentially drive investment away from the country. They stress that while these rules were implemented to protect consumers, the FCA must also consider the commercial viability and competitiveness of crypto firms.
A recent survey demonstrated that a resounding 75% of participants found it challenging to navigate the FCA registration process. This feedback further emphasizes the issues already raised by crypto executives, indicating that while it’s essential for regulation to protect investors from digital asset scams, the process must also be manageable and feasible for firms to ensure that crypto innovation continues to thrive.
Source: Cryptonews
