The U.K.'s Financial Conduct Authority (FCA) has once again extended the registration deadline for existing crypto businesses in the country. The new registration deadline is March 31, 2022, the FCA announced Thursday.
The FCA established a temporary registration regime last December after struggling to deal with hundreds of applications. The initial deadline was January 10, 2021, before it was pushed back to July 9. The regime allows existing crypto firms, who have applied to be registered with the FCA, to continue trading.
The FCA has had to extend the deadline twice because many applications are still pending review. "An unprecedented number" of firms are also withdrawing their applications, according to the FCA, because they are not meeting the required standards under the money laundering regulations.
Indeed, last week U.K. Treasury official John Glen said more than 90% of the firms assessed to date have withdrawn their application following the FCA intervention. According to Glen, many crypto firms have failed to hire the right people to implement anti-money laundering processes.
Stuck in limbo
There are 167 crypto firms still awaiting registration, said Glen last week. There are also 77 new crypto startups whose applications are pending a full assessment.
To date, only five crypto firms have been registered in the U.K. Those are Ziglu, Archax, Digivault, and two Gemini entities.
People familiar with the FCA's registration process recently told The Block that the watchdog lacks enough manpower and expertise. “Applicants are being subjected to three-hour-long interviews over their anti-money laundering procedures over the phone and there’s an average of about 80 document requests per application,” one source said at the time.
The FCA's inaction has already led to interventions from lobby group CryptoUK, which called for help from U.K. finance minister Rishi Sunak in March. Last month, member of parliament Tom Tugendhat called on HM Treasury to create a "safe space" for crypto innovation in the U.K.
The FCA today said it will "only register firms where it is confident that processes are in place to identify and prevent [money laundering and terrorist financing] activity." The extended deadline allows crypto firms to continue operating while the FCA continues with its assessment.
The FCA today also once again warned that crypto is speculative and investors should be prepared to lose all their money. "Even if a firm is registered with the FCA, it is not responsible for making sure cryptoasset businesses protect client assets (ie customers’ money), among other things," said the watchdog.
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