- FCA has compiled a list of over 100 crypto firms that are non-compliant in a bid to help investors make investment decisions.
- Companies established before FCA was authorized to supervise them are required to apply for the Temporary Registration Regime (TRR).
The increasing adoption of cryptos in the United Kingdom has called for the advancement of regulatory structure to protect the reportedly over 2.3 million holders of crypto assets. On January 10, the UK’s financial watchdog, Financial Conduct Authority (FCA) was appointed to enforce Anti-Money Laundering and Counter-Terrorist Financing measures.
All UK-based crypto firms have since been required to register with the FCA and comply with AML regulations. However, several of such firms have not registered with the regulatory body, posing risk to crypto users and other financial institutions. The UK financial regulator has, therefore, compiled a list of over 100 crypto firms that are non-complaints to help investors learn their stance before making investment decisions.
Mark Steward, FCA’s head of enforcement highlighted the threats these entities pose:
We have several firms that are doing business in the UK without being registered with us and they are dealing with someone: banks, payment services firms, consumers. This is a very real risk so we are worried about that.
The rigorous UK Anti-Money Laundering Law is suspected to be putting companies off as over 51 crypto firms have withdrawn their registration application to the FCA as of June 4.
UK regulators concerned about growing crypto popularity
The hostile demand of law enforcers has so far not been any different from the US as the London Metro Police called on the legislature to enable them to approach crypto crime just as cash-based crimes. The police are also calling for changes to authorize them to freeze crypto assets of individuals and businesses under investigation. The changes are required to prevent criminals from making crypto transfers.
The UK regulators are extremely concerned about the decentralized assets as their popularity grows among its citizens. Recently, a survey disclosed that half of the British crypto holders plan on increasing their exposure as they expect to rake in some profits at some point. It was also discovered that the average investment which increased from £260 to £300 million was the same as £1 trillion in the portfolio of small retail investors of Britain.
According to Steward, the rush to hold cryptos is due to the fear of missing out as witnessed in the 1630s Dutch Tulip Mania
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The reason many are investing now is that they have a fear of missing out on what might be a boom. Leaving aside how volatile these instruments are, it has tulip mania written all over it.
It is, therefore, proper to reduce the risk by updating its regulation to crypto firms. Companies that were operating before FCA are now required to apply for the Temporary Registration Regime (TRR). The deadline for the temporal registration has been extended from July 2021 to March 2022 as the FCA is working on backlogs of applications. This is to give them a temporary license to operate as their processed full registrations are being assessed.