The UK’s Financial Conduct Authority (FCA) has recently shared a comprehensive update on crypto-asset registrations processes, which are said to be focused on building strong foundations.
The FCA noted in its extensive update that quite often, they are asked about the number of companies they have actually registered, as well as the process itself.
The FCA pointed out that some have suggested they’re “too tough” on crypto firms, setting the bar a bit “too high” for registration.
The UK regulator shared in a blog post that it has even been said their approach could stunt or stifle innovation and related breakthroughs/activities and call into question the UK’s overall position as a global financial hub.
FCA further noted that theynever turn applications down out of hand.
However, the FCA clarified they aim to “treat the risk of firms being used for money laundering extremely seriously.”
According to the FCA update, allowing illicit money to flow freely can destroy lives. Moreover, the FCA said that terrorism, organized crime, sanctions evasion and human trafficking are just some of the “real-world issues” that they are helping tackle by “maintaining the standards the Money Laundering Regulations (MLRs) require.”
The FCA added that by relaxing their standards and creating a race to the bottom also “won’t ensure people and our markets are protected or even work well.”
The FCA also stated in the update that innovations built quickly on unsafe, unregulated and untrusted foundations tend to “become a house built on sand – likely to collapse.”
The FCA added that instead, they want to closely collaborate with partners across government, industry and other jurisdictions in order to “develop a crypto sector that’s built on reliable, sturdy foundations.”
The FCA further explained that by doing this, they can help “enable safety, security and sustainable growth for years to come.”
Keeping financial crime out of our markets “is critical. So too is enabling trust in our financial system.” the FCA explained.
The FCA also said that they know that setting and maintaining standards people can trust is a key part of “any thriving, competitive sector.”
They claim that this is why they hold all firms seeking registration, “not just crypto firms, to strong and universal standards.”
But the FCA clarified that they also know the nascent crypto-assets industry is still developing, and this can present “challenges for those adapting to new regulatory processes.”
The FCA also shared that they “actively want to work with you.”
The FCA encourages the industry to engage with them early through their pre-application meetings and use the “wide range of practical support they offer throughout the process.”
The FCA acknowledged that no 2 registration applications are ever the same.
So, their guidance, pre-application meetings and practical examples are there to help each individual applicant.
The FCA also explained that their decision on whether to register isn’t just based on the “controls and systems firms have in place.”
The FCA also said that they look at the environment “they operate in, the people involved in these processes and the customers they want to reach.”
All this means the time it takes to “reach a decision can and will vary.”
The FCA also stated that they are sure the number of crypto firms they are registering will remain under the spotlight as they “continue to set out the UK’s crypto regulatory regime.”
Equally, they said their overall focus must “remain fixed on doing their job, protecting consumers and the vital integrity of our financial system.”
What they will do is support prospective firms to meet the “required standards and only register firms that do.”
They’ll continue to weed out those that “can cause harm.”
The Financial Conduct Authority also explained that these standards underpin their vision of a healthy, “globally competitive and vibrant crypto sector in the UK.”
By upholding regulatory standards like the MLRs, the FCA says that they aren’t “just protecting the present, we’re safeguarding the future.”
If you’re a firm that wants to become registered under the Money Laundering Regulations:
- Read through what you’ll need to do to apply and the frequently asked questions on our dedicated webpage for crypto firms.
- Take a look at the examples of good and poor practice for submitting an application.
- Engage with us early on – reach out and book a pre-application meeting at DigitalAssetsPreApp@fca.org.uk.
- Make sure you provide complete applications for us to assess.