The FCA exhibits a high decline rate for crypto applicants while taking massive periods to process each application.
The UK’s premier financial regulator, the Financial Conduct Authority, has rejected 87% of crypto firms from receiving licensing due to weak money laundering and fraud detection protocols in the last year.
“Over 87% of crypto registrations were withdrawn, rejected or refused for weak money laundering controls,” the FCA’s Annual Report and Accounts for 2024 mentioned. However, it said, “44 crypto firms now have money laundering registration.” Out of that, 35 applications were accepted, 15 were withdrawn, and nine were denied in the previous 12 months.
Crypto Firms Disinterested in Registering in the UK
Crypto firms have expressed disinterest in registering in the jurisdiction due to the overly strict approach the FCA has taken over the years. A Finextra report revealed that the regulator saw a 51% decline in crypto firms applying with it in the last three years. It received only seven applications in the first quarter of 2024. Furthermore, 186 applications were withdrawn during the past three years.
Moreover, the UK’s National Audit Office has pointed out the lack of professionals with crypto-related skills working for the FCA, which has caused the agency to take more time than needed to process applications. It takes about 459 days on average to process an application. With the number of applications it has dealt with thus far, the FCA has collectively spent 25 years’ worth of manpower.
“Firms aren’t going to wait forever for approval, particularly if another jurisdiction seems to offer a comparatively quick process, with access to a comparably sized or even larger market,” Bret Hillis, partner at law firm Reed Smith, commented. “Effectively, we risk the UK’s crypto market being challenged from without by a growing number of increasingly crypto-friendly regimes and also from within by a remarkably slow approval process.”
