The UK’s Financial Conduct Authority said on Wednesday it was giving some crypto companies more time to register with the regulator beyond the original March 31 deadline.
Select firms, including fintech company Revolut and crypto start-up Copper, will be allowed to continue trading once the temporary registration arrangements are closed, FCA said in an update on its website.
Copper counts former UK finance minister, Philip Hammond, as an advisor.
The temporary register closes on Friday “for all but a small number of firms where it is strictly necessary to continue temporary registration,” the FCA said.
“This is essential where a firm may be pursuing appeals or there may be special winding-down situations.
Crypto firms operating in the UK are required to be registered with the FCA under money laundering regulations. But many companies haven’t made the cut yet. The FCA set up a temporary register to allow firms to continue trading, while they demanded full authorization.
The list of firms on the temporary register has shrunk significantly in recent weeks, with market makers B2C2 and trading app Wirex withdrawing their applications among firms.
B2C2 is transferring its spot trading operations to a U.S. entity, while Wirex plans to offer crypto services from the Croatian subsidiary to Brits.
Now, only 12 businesses remain on temporary governance, including Blockchain.com Revolut, Copper and crypto wallet platforms.
Crime remembered ‘red flags’
Pésef, a fintech firm that is on the FCA’s full register, said it welcomes “increased regulatory oversight” of the crypto industry.
“The UK’s registration regime will mean that many companies will inevitably need to exit the UK market as they are unable to meet the standards required in terms of risk and compliance,” Chirag Patel, CEO of PESEF’s digital wallet division, said via email.
Nevertheless, there has been a backlash from the crypto industry on FCA’s handling of the registration process. Industry insiders had previously told CNBC that the regulator is under-staffed and slow to approve applications.
For its part, the FCA says that the “high number” of crypto firms are not meeting the necessary anti-money laundering standards. So far only 33 companies have built it on a full register.
“While we have registered 33 firms, we have seen many financial crime red flags missed by cryptoasset businesses seeking registration,” the FCA spokesperson said via email. Worse, we have seen instances where firms do not have the controls necessary to raise red flags in the first place.
The watchdog’s deadline extension comes as British officials are set to announce a new regulatory regime for crypto as of next week, according to CNBC sources. The Treasury Department declined to comment when asked about the plans.