UK FCA’s Deadline Of March 31st Approval Sparks A Mass Exodus Of Crypto Firms

UK FCA's Deadline

Welcome back to the Tribe! In this post we dive into the UK FCA’s Deadline coming up and what it means for the crypto market!

Nothing should be considered investment or financial advice. Enjoy the ride!

UK FCA’s Deadline

The temporary registration regime set by the UK’s Financial Conduct Authority (FCA) is set to end by March unless extended. With three days left, many crypto firms that have been removed from the register or remain in the register without full approval are at the risk of being shut down. A decision that has led most of them to consider moving operations abroad.

Establishment of The Temporary Registration Regime For Cryptoasset Firms

In a press release dated December 16, 2020, the UK’s FCA established a temporary regime to allow existing cryptoasset firms who had earlier applied for approval to continue offering services. This temporary registration status was to be made permanent if they met certain anti-money laundering standards.

According to the release:

“The Temporary Registration Regime is for existing cryptoasset businesses which have applied for registration before 16 December 2020, and whose applications are still being assessed. This is to enable those existing businesses to continue to trade after 9 January 2021 until 9 July 2021, pending the FCA’s determination of their application.”

The release further stated that “firms that did not submit an application by 15 December 2020 will not be eligible for the temporary registration regime. They will need to return cryptoassets to customers and stop trading by 10 January 2021. Firms that do not stop trading by that date are at risk of being subject to the FCA’s criminal and civil enforcement powers”. 

Following this decision, some firms lost the ability to do business in the UK as of January 2021. But the deadline for the temporary registration was extended from July 2021 to March 31, 2022, placing every company on the list for temporary registration pending full approval.

Some Companies Failed to Meet The Standard For Full Approval

The road to gaining full approval has been a long one for some firms as they failed to meet the standard for full approval.

CNBC reported a few days ago that;

“The FCA said many crypto companies had withdrawn their applications as they were not meeting the required anti-money laundering standard”.

The firms that withdrew their application were struck off the temporary registration list and had to cease operations, while some others remained on the list. The firms remaining on the temporary register included $33 billion fintech firm Revolut L.t.d and Copper Technologies – a crypto startup that has former UK Finance Minister Philip Hammond as an advisor.

Firms Still Awaiting Regulatory Approval Looks Abroad

The FCA has since taken a tough stance on crypto regulation due to a significant spike in demand for digital assets among retail investors over the last two years. A stance that has seen only 33 firms achieving permanent registration with the body.

According to a Bloomberg report, some six firms fell off the temporary list last week. The report said:

“Six companies — including crypto market maker B2C2 Ltd. and crypto digital banking apps Wirex Ltd. and Trastra Ltd. — fell off the temporary register last week without gaining full authorization”.

With 3 days left before the March 31 deadline, 12 firms remain on the temporary register. This includes Revolut and Copper and they are at risk of being suspended if they don’t get fully approved by the FCA before the deadline.

While it is still possible that the FCA might extend the deadline, some firms have already started the process of moving their operations abroad to enable them to continue servicing UK customers. Meanwhile, nearby countries such as Croatia and Switzerland top the list of favored destinations.

CoinBurp L.t.d one of the firms that fell off the list last week, has since stopped offering services to its UK customers. But, according to its Chief Executive Peter Wood, the company is in the process of restoring it.

B2C2 also said that spot trading of cryptoassets is handled by its US entity. A path Wirex is also planning to explore. Wirex plans to service its UK customers from its Croatian subsidiary.

Copper is also pursuing plans to gain regulatory approval in Switzerland as a second option, while it remains in dialogue with the FCA.

An FCA spokesperson said firms that do not meet its required benchmarks can choose to withdraw their application, or have the right to appeal a rejection.

Other News – Crypto Market Rallies

The entire cryptocurrency market has grown over the last 7 days as over $200 billion flowed into the market. Bitcoin has so far led the charge during the latest market-wide recovery since the major dip in December 2021.

As of the time of writing this report, Bitcoin has sustained levels above the key $46,000 resistance point. With a fury of cash injections in the market, BTC bulls could target ranges above $50k to extend the current relief period.

Read more here…

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