In the United Kingdom today, the crypto industry is currently one of the most popular. Like many other industries, the Financial Conduct Authority (FCA) has the authority to permit an exchange to operate, as long as it allows crypto asset trading under the MiFID II. Businesses in this jurisdiction must be FCA compliant with certain crypto asset regulations laid down by the regulatory body.
According to the latest news by the UK’s financial watchdog, only 14% of crypto companies applying for FCA regulation got approval from the regulatory body. Out of 300 companies that applied, the report says only 41 firms got approval, 29 companies got rejected, and 195 companies either withdrew their applications or got refused. Below, you’ll find the full story regarding the latest FCA advice on how your company can successfully apply for FCA regulation approval.
41 crypto companies approved, others rejected – UK’s FCA
In January 2020, the United Kingdom’s Financial Conduct Authority implemented new crypto-focused regulations. The purpose of these regulations is to help supervise companies running businesses in the crypto industry. The FCA regulations monitor these businesses, ensuring they pass through the same Anti-Money Laundering & Counter-Terrorist Financing regulations that businesses in the traditional finance sector are subjected to.
Roughly 300 crypto companies in the company applied for full approval for the FCA regulations since the opening of the regime 2 years ago. Unfortunately, out of these companies, only 41 of them got approved, according to the regulator. The regulator further revealed that 29 companies were rejected, while 195 firms either withdrew their applications or were refused.
Although the FCA didn’t reveal why 29 crypto companies got rejected, it did provide feedback regarding what other companies can do going further to avoid rejection. Below is a brief of what the regulator said:
“This feedback should assist applicants when preparing their application for FCA registration and help make the process as simple and efficient as possible.”
Measures to put in place for your next FCA authorisation approval
Are you looking to apply for registration and FCA authorisation in the coming days or weeks? If yes, there are certain requirements you need to meet to avoid having your application rejected.
According to the FCA feedback, you need to include information regarding your business model. In addition, your business needs to include details regarding the roles & responsibilities of your work partners. That’s not all; your business also needs to demonstrate it has capabilities for business-wide risk assessment. Flow-of-funds charts, your source of liquidity, and business policies are a few other factors you need to detail in your application.
Here’s what the regulator said in its feedback:
“When preparing applications, crypto firms need to add details of a business model, roles & responsibilities of their business partners, and demonstrate comprehensive business-wide risk-assessment capabilities. It should also detail its business has policies, systems, and controls to manage financial risk.”
Furthermore, the regulator said crypto firms are only eligible to apply for FCA Authorisation if they run their operations in the UK and have their head office located in the country. If your company meets the above requirements, you need to have a money laundering reporting officer in place to monitor your application and ensure you’re heading on the right path.