Discover why 87% of crypto firms in the UK fail to meet registration standards, citing weak anti-money laundering (AML) protocols and fraud protection. Learn how lengthy approval processes are driving companies abroad.
The UK’s Financial Conduct Authority (FCA) has taken a strict stance on crypto companies, with a staggering 87% of registration applications failing to meet required standards for approval in the most recent fiscal year. Between April 2023 and March 2024, only 4 out of 35 applications received approval, with notable successes including Binance’s payment partner BNXA, PayPal UK, and the crypto custody joint venture Komainu. Most other firms were either rejected or withdrew their applications due to failures in meeting anti-money laundering (AML) and fraud protection requirements.
Since 2020, the FCA has been responsible for overseeing crypto firms under its AML regulations. However, many companies have criticized the process, citing lengthy wait times and a lack of clarity during the registration process. The average wait for approval is reported to be 459 days, and over the past three years, 186 companies have chosen to withdraw their applications altogether. This has led many firms to consider registering in other jurisdictions to avoid these delays and still serve UK customers.
The FCA’s annual report highlights the issue: many of the rejected applications either lacked key components for assessment or provided incomplete submissions, further complicating the process. Additionally, in June 2023, the FCA introduced a new “financial promotion perimeter” to regulate crypto advertising, ensuring that such promotions are clear, fair, and not misleading to the public. The regulator also pointed out an increase in consumer awareness about crypto scams, with 63% of those who contacted the FCA about potential scams doing so before investing, a slight rise from 2023.
While the regulator’s stringent approach is meant to ensure robust fraud and AML protocols, the drawn-out registration process has led some to question whether London remains competitive as a global crypto hub. Experts, including legal firms, warn that if the UK continues to experience such long delays and regulatory bottlenecks, more companies may seek opportunities in other countries.
