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In recent months, crypto platforms with U.S. operations, including, Wirex and B2C2, withdrew their application to register with the United Kingdom (UK) financial service watchdog after failing to meet the standards of acceptance.
Companies operating in the US, including Wirex and B2C2, withdrew their applications to register with a UK financial watchdog.
Via @caseywagnerr https://t.co/OEn42OLyUn
— Blockworks (@Blockworks_) January 29, 2023
The agency’s reports this week showed that a considerable number of crypto companies that attempted to register with the U.K.’s Financial Conduct Authority (FCA) were denied. As of now, there are only 41 companies listed as registered crypto-asset firms on the FCA’s registry.
In a letter released early this month, Sarah Pritchard, FCA’s executive, stated that around 85% of crypto asset firms that applied for registration could not demonstrate that they met the required minimum standards. FCA’s executive further stipulated that,
As part of the registration process, we identified significant failures in crucial controls, including risk assessments, due diligence, transaction and ongoing monitoring, governance, and Management Information.
The FCA also doubted that the people leading some of the denied crypto platforms lacked the skills and knowledge required to act effectively and efficiently run the business. A cryptocurrency solicitor at Keystone Law, Alexander Carter-Silk, stated that,
It is not easy to judge whether personnel leading in companies lack appropriate knowledge, skills, and experience when judged against a lack of transparency and an absence of benchmarks and guidance from the FCA. There is no clear explanation of what applies to the crypto asset business, possibly because the FCA fears the new technology.’
Early this year, the UK set a deadline for any crypto company wishing to conduct its operations in the country to register by April last year with the FCA. However, only 27 out of over 100 firms under consideration managed to acquire the approval by March. The regulator noted that 58 firms were denied by March 15 of the same year, and a ‘small number’ of platforms were allegedly involved in criminal activities or directly linked to organized crime.
Companies that made the cut in UK
However, some companies that managed to get to FCA’s registry include Coinpass Limited, Galaxy Digital’s UK branch, Genesis Custody, Fidelity Digital Assets, and Wintermute Trading, among others.
In China, a campaign against cryptocurrencies escalated after industry bodies banned cryptocurrency-based financial and payment services. The state council vowed to crack down on bitcoin mining and trading. In May 2021, China banned financial institutions and payment companies from providing services related to crypto transactions.
Apart from China, in the U.S., states have some control over which crypto services can be offered and by which companies. A condition such as New York’s BitLicense law prevented various companies from conducting business in the state, including Kraken.
However, Katharine Wooller, a business unit at digital asset protection firm Coincover, stated:
If we want to move forward as a global leader in digital assets, we need to start working with firms to develop a regulatory framework.
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