PayPal UK registers with FCA for crypto services but faces stringent restrictions

PayPal UK has registered with the UK's Financial Conduct Authority (FCA) to offer crypto asset activities within the country.

The registration was effective from Oct. 31, according to the UK financial regulator's website. However, a notice on the FCA's website stated that PayPal UK will be subject to specific restrictions that apply unless the FCA has granted otherwise.

The restrictions mean that PayPal UK will not be able to bring on new customers and existing customers will only be able to hold or sell tokens; they won't be able to buy any tokens. They add that the company can't expand its current range of services.

Beyond this, the FCA outlined a list of prohibited services, including facilitating peer-to-peer transactions, getting involved with initial coin offerings, providing staking services and participating in DeFi activities such as crypto asset lending and borrowing.

PayPal UK also won't be able to operate "a machine which [uses an] automated process to exchange cryptoassets for money or money for cryptoassets."

Pausing crypto purchases

In August, PayPal paused the ability to make crypto purchases in the UK due to the FCA's rules. This will continue until 2024.

PayPal’s crypto registration comes as the UK Treasury released its final proposals for future regulation of crypto asset activity on Monday. The proposals outline the UK government's intention to bring several crypto asset activities into the regulatory perimeter for financial services for the first time.

Companies offering crypto services in the UK must be approved for registration and comply with the FCA's anti-money laundering rules.