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06/09/24
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FCA’s 2024 Report: Struggles in Cryptocurrency Firm Registration Highlight Regulatory Challenges
The UK Financial Conduct Authority (FCA) has highlighted significant challenges in the registration of cryptocurrency firms in its latest annual report for 2024. The findings reveal that approximately 90% of crypto businesses attempting to register in the past year did not meet the regulator’s standards. The primary reasons cited for this lack of approval were deficiencies in anti-fraud and anti-money laundering measures.
The report indicates that of the 35 applications received, only four received approval, while 15 were withdrawn and nine were outright rejected. The FCA emphasized that some submissions lacked essential details necessary for a thorough evaluation, and in many cases, the quality of the provided information fell short of expectations.
In June 2023, the FCA introduced a new framework aimed at regulating financial promotions related to cryptocurrency within the UK. This initiative was designed to ensure that cryptocurrency advertising is transparent, fair, and not misleading to potential investors. The FCA noted that public awareness of crypto scams has improved, with 63% of consumers reporting that their inquiries about scams occurred prior to any investment, marking a 5% increase from the previous year.
Amidst these challenges, international law firm Reed Smith has suggested that cryptocurrency firms might benefit from exploring opportunities outside of the UK. The lengthy processing times at the FCA have raised concerns, with firms reportedly waiting an average of 459 days for registration decisions. Over the past three years, the FCA has effectively devoted 25 years’ worth of labor to handle these applications, yet 186 firms have chosen to withdraw their applications during this period.
These statistics and observations underscore a growing concern about the competitiveness of the UK as a destination for cryptocurrency businesses, prompting some firms to consider alternatives in more receptive environments.
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