- The financial markets watchdog has rejected 87% of crypto applications due to money laundering concerns.
- The FCA has faced criticism for its sluggish approval rate.
The number of crypto firms’ applications being scuppered due to money laundering concerns rose to 87% over the last year, the Financial Conduct Authority said in a report released Thursday.
That’s up from 85% last in 2023, and well above the industry average of 36% of financial firms having applications rejected, refused or withdrawn due to weak anti-money laundering controls.
“We help firms applying for authorisation by communicating our expectations and issuing guidance on good and poor practice,” the FCA said in the report. “This is helping firms understand what is required — 44 crypto firms now have money laundering registration.”
The news comes as ousted Prime Minister Rishi Sunak’s 2022 pledge to transform the UK into an innovative hotbed has stalled. The snap election Sunak called in May delayed promised laws to regulate the industry.
“It’s net negative, really, because we are laggards,” Ian Taylor, board adviser to trade body CryptoUK, told DL News in May. “We’re behind the rest of Europe firstly, and then other jurisdictions in Asia and the Middle East.”
The low acceptance rate will do little to allay those industry concerns.
No approvals since February
Firms must register with the FCA if they want to offer services like crypto trading or providing wallets.
The regulator has only accepted 4 out of the 35 applications from crypto firms it has received over the past 12 months. The last firm to be approved was institutional market maker Portofino Technologies in February, according to the regulator’s registry.
While the industry has bemoaned the low acceptance rate, the regulator has defended itself.
“We expect firms to be fit and proper and have adequate systems to identify and prevent flows of money from crime,” an FCA spokesperson told DL News in August.
Oliver Linch, CEO of defunct crypto exchange Bittrex Global, told DL News in February that crypto firms griping about not being approved didn’t understand the system.
“Firms may just have assumed that they would be fast-tracked by the FCA or given an easy ride, and they’re now discovering that they underestimated the rigour of the system,” he said.
“That is a good thing.”
Eric Johansson is DL News’ News Editor. Got a tip? Email at eric@dlnews.com.