Despite the plans to turn the region into a bustling crypto hub, the United Kingdom’s financial watchdog says it has given the all-clear to only 41 out of 300 crypto firm applications seeking regulatory approval to date.
The U.K. Financial Conduct Authority (FCA) implemented the 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-terrorism financing (CTF) regulations as firms in traditional financial markets.
A statement from the FCA has revealed that of the 265 applications that were “determined” a mere 15% of these applications were approved and registered, 74% of firms either refused or withdrew their application, while 11% were rejected. Another 35 applications are yet to be determined.
While the FCA didn’t expressly state the cause of d the rejected or withdrawn applications, it did provide feedback on “good and poor quality” applications.
Among the more complete applications included 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, the report stated.
A flowchart which helps firms understand whether they need to register with the FCA. Source: FCA
Incomplete applications were more apparent where companies used the application to promote their products and services, particularly in cases when the application process was still ongoing:
“Applicants’ websites and marketing material must not include language that gives the impression that making an application for registration is a form of endorsement or recommendation by the FCA.”
The report suggests that some companies may have had their applications scrapped if they couldn’t show that they have sufficient blockchain-compliance resources set in place to monitor on-chain transactions.
The FCA also doubled down on its anti-money laundering stance, demanding that all firms appoint a money laundering reporting officer who…