Crypto companies based across the United Kingdom are gearing up to either pack up and leave or register with the Financial Conduct Authority (FCA) before Mar. 31, which lands next week. In December 2020, the finance watchdog issued a temporary registration for companies utilizing cryptocurrency assets and advised the public with any cryptoassets to pull them out before Jan. 10.
Now, the full deadline nears, with many crypto firms remaining reluctant or altogether ignorant of the forthcoming ax. According to CNBC, the FCA reported several said companies withdrawing from the register as their business practices did not meet the watchdog's anti-money laundering rules, an unfortunate commonality among cryptoasset firms whose practices are largely based on anonymity and decentralized ledgers.
On the cusp of the Mar. 31 deadline, various crypto companies are now on the edges, such as Copper and Revolut, as a business in the United Kingdom may become defunct. However, for the UK-based crypto companies, dealing with the FCA and its registration procedures isn't all that ideal in the face of potential closure.
One lawyer explains to CNBC, "The process has been a total disaster from the FCA's side of things." They relay that much of the dealings with the finance watchdog are incredibly lacking in detail, slow to respond, or entirely unresponsive altogether, making potential registers reluctant to try.
According to the FCA, nearly 80% of crypto firms that registered had their application outright rejected or withdrew its application from the process. The list of officially registered crypto firms only has around 33, proving that the proceedings are going rather sluggish and are at a point of dire necessity.
However, the various cryptocurrency companies do have options in the face of the FCA. Those withdrawing are doing so out of simple time efficiency, as the "expected benchmark" may not be adequate for the company and it decides instead to forgo registration. Others can simply appeal the final decision if it doesn't meet its intended target, which takes the registration process then to the courts for a final decision.
While frustrating and seemingly sluggish in its approach to cryptoasset affirmation, the finance watchdog is certainly a necessity in the area. FCA registration provides consumers with an underlying assurance that their business and their assets are safe in the hands of the many varied UK crypto firms.
Head of Gemini's British division, Blair Halliday, explains to CNBC:
"Getting a crypto asset registration in place was a critical step for crypto in this country. It gave firms that really have that desire to seek regulatory approvals something to demonstrate as a key differentiator."
While companies can appeal the decision made by the FCA, ultimate decisions typically take even longer to receive, given the amount of time it takes to get into and through the various court proceedings. Plus, in the end, typically, the FCA's vote comes out as the dominant play, witnessed best in the refusal made to Gidiplus, a crypto exchange that did not meet FCA standards.
Although in good faith and meant only to streamline consumer assurances, the FCA's registration process may, in the end, put a damper on the UK's burgeoning dominance in both fintech and cryptocurrency concepts. Like the aforementioned Copper and Revolut, companies may have no other choice but to take their thriving businesses elsewhere if proceedings can't be met, which will only cause substantial detriment to the UK's fintech industry.
