UK’s progress in crypto innovation hangs in limbo due to a lack of clarity from the watchdogs. Many high-profile companies are now looking for crypto friendlier pastures elsewhere.
If cryptocurrency-based firms wind down their operations, the UK might face a mass exodus as the FCA deadline for receiving approval nears.
Regulatory Hurdles in the UK
The cryptocurrency market is largely unregulated in the UK. However, companies associated with the industry are required to register with the Financial Conduct Authority (FCA) under the Temporary Registrations Regime (TRR), heed to Money Laundering Regulations.
So far, only 33 firms have managed to obtain permanent registration with the regulatory entity, according to the latest reports. With just a few days to go until the crucial government deadline, crypto custodian Copper Technologies Ltd., digital bank Revolut Ltd., and 12 other platforms, which have temporary registration regimes for crypto-asset businesses, would have to face suspension if they fail to score an approval.
Meanwhile, London-based crypto market maker B2C2 Ltd. and crypto digital banking apps Wirex Ltd. and Trastra Ltd. withdrew from the temporary register last week. This comes after the FCA warned the companies operating on temporary authorization to either withdraw applications and shut down any UK digital asset operations or go through the process and face a risk of rejection.
Wirex confirmed that the withdrawal would not impact the customers. Copper Technologies, on the other hand, revealed that it was still in talks with the FCA after establishing an entity in Switzerland that would enable the platform to serve UK customers even if it fails to achieve a green light.
CoinBurp is the latest company whose name vanished from the registrar and exited FCA’s process. It is now looking to work with the customers via its Croatian subsidiary Wirex Digital. It appears that other companies are also following suit and have already started moving their operations to European countries with flexible regulations to be able to service the customers in the UK.
Regulating Crypto and DeFi
Earlier, the Bank of England’s Financial Policy Committee stated that economic function with regard to cryptocurrencies should take place within existing regulatory arrangements.
It also stressed that the legislative perimeter should be adapted as necessary to ensure a similar regulatory outcome. Both the BoE and the Treasury seek to regulate stablecoins in addition to fit international efforts to control DeFi applications.
In a related development, CryptoPotato reported recently that the UK’s watchdog of advertising – Advertising Standard Authority (ASA) – issued a warning against over 50 crypto-related companies. These included Coinbase and eToro, and the agency told them not to encourage people to buy digital assets using credit cards or swap their pensions for assets such as Bitcoin.