The Financial Conduct Authority (FCA) of the UK remains vigilant over the crypto industry. Since January 10, 2020, 291 crypto businesses sought registration under the 5th Anti-Money Laundering Directive (5MLD). However, the FCA granted approval to just 38 firms, constituting a mere 13% of total applications.
Rigorous Crypto Regulations
In response to a Freedom of Information request, the FCA revealed that it hasn’t directly declined any firms. Yet, it noted that it refused five applications and rejected 22. The 5MLD, enacted in January 2020, bolsters anti-money laundering and counter-terrorist financing measures.
Conditions and Withdrawals
The FCA attributed certain refusals to applicants not meeting conditions specified under the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017 (MLRs). The regulator highlighted that firms failing to provide required information as outlined in regulation 57 of the MLRs would lead to application rejection.
Interestingly, 155 crypto entities withdrew their registration applications during this period for various reasons, including not meeting criteria for registration as digital asset exchanges or crypto custody wallet providers.
UK’s Crypto Regulatory Landscape
In line with Europe’s approach, the UK has been establishing rules to regulate the crypto industry. Recently, a law authorized by King Charles III classified cryptocurrency trading as a regulated activity and extended payment rules to stablecoins. The legislation also encompasses measures to manage the promotion of digital assets.
Expanding Crypto Interest and Oversight
The FCA reported a significant increase in UK crypto holders in 2022, prompting intensified scrutiny over crypto marketing and advertising. New supervisory rules in this context are scheduled to take effect on October 8.