The British principal financial regulator, the Financial Conduct Authority (FCA), has recently disclosed pertinent statistics for crypto firms seeking registration. Since January 2020, a total of 291 crypto companies have applied for registration, yet only a mere 13% (38 firms) were successful in acquiring a permit to operate within the United Kingdom.
The extensive scrutiny applied by the FCA in greenlighting applications is obvious when delving into the numbers. A surprisingly large amount, 155 applications, were voluntarily withdrawn by the firms themselves. The FCA, being process-oriented, motivates these withdrawals by encouraging firms to iron out deficiencies in their application and submit them anew at a later date.
This hair-splitting attention to detail and process by the FCA is remarkable and arguably necessary given the nascent nature of the crypto industry. Nevertheless, it paints a concerning picture of a somewhat rigid industry landscape, where an overwhelming proportion of applications is withdrawn or rejected outright. Firms are faced with a stringent set of minimum criteria to meet under regulation 57 of the MLRs, leaving little room for error.
On one hand, these severe regulations have been helpful to curtail illegal activity and protect investors. Previously, the FCA made headlines when it pressed harsh actions against Binance Markets Limited and issued stern warnings to local crypto ATM operators. Additionally, they mandated that all crypto asset firms in the U.K align their marketing strategies with the financial promotions regime.
On the downside, one would argue that strict regulations may curtail the growth potential of the crypto and blockchain sector. This landscape may inadvertently stifle the innovation spirit of emerging crypto firms who are keen to participate in this digital revolution.
Tagging the edges of this crypto frame are companies such as Skrill, eToro and Gemini who have made it through the rigorous registration process. They now stand proudly on the FCA’s list of 42 registered crypto asset providers. This casts a beacon of hope to potential applicants that registration success is within reach.
In conclusion, whilst the FCA’s stringent regulations may unintentionally sideline lesser-prepared firms, they hold steadfast in their mission to provide a safer, more reliable crypto industry in the United Kingdom. Whether this results in a balanced and vibrant ecosystem in the long term remains to be seen.
Source: Cointelegraph
