FCA angers lawmakers by extending crypto compliance deadlines
FCA extended temporary operation permission deadlines out of obligation to compensate for their inefficiency, allowing the likes of Revolut and Copper to remain active.
The UK’s Financial Conduct Authority (FCA) released a notice in 2019, condemning all crypto businesses to comply with their AML/CFT rules by 9 January 2021 and acquire their licenses.
However, by December 2020, this deadline was still far from being met. Therefore, the FCA established a Temporary Registration Regime (TRR) so that crypto-asset firms who have already applied to obtain their licenses can continue trading. They also extended the final deadline for compliance to 1 April 2022.
Since the announcement, many from the FCA’s list of unregistered cryptoasset businesses have shut down. While some did not pay any attention to the regulatory call, some applied and got rejected. Many firms who tried have publicly voiced their distress with FCA’s extreme measurements and withdrew their applications. A CEO of a crypto firm who opted to relocate said:
“We decided some time ago to say ‘screw them”
In the end, only 33 firms were able to finalize their registrations among hundreds.
Details of the extension
This extension was only applied to 12 firms (including Revolut, Copper, and blockchain.com’s crypto wallet) that were obtaining their licenses. As a result, only these firms will be able to continue trading crypto assets as unregistered entities. The rest of the unlisted crypto companies are still expected to stop their business activities by 1 April.
The FCA showed the slowness of the licensing process as the justification for their second extension. An FCA spokesperson said:
“The temporary register closes on Friday, for all but for a small number of firms where it is strictly necessary to continue to have temporary registration. For example, this is necessary where a firm may pursue an appeal or have particular winding-down circumstances.”
Why are lawmakers angry?
This extension may have prevented certain crypto businesses from retreating from the UK, but lawmakers said it was unnecessary as it includes only a small number of companies.
Many Members of the Parliament voiced their frustration with the extension soon after it was announced. The lawmakers were mainly furious that the FCA couldn’t keep up with their already extended deadline due to their insufficient internal procedures.
Chair of the Treasury select committee, MP Mel Stride, said:
“It is disappointing to hear that the FCA hasn’t fully met its already-extended deadline, which the committee strongly encouraged it to meet. I look forward to receiving a full explanation for the delay.”
Supporting Stride, Chair of the UK Parliamentary Group on Crypto and Digital Assets, Lisa Cameron said:
“The lack of clarity from the FCA has presented huge challenges to firms in terms of business certainty. We are now hearing of firms actively leaving the UK due to the FCA’s approach, which will cost the UK in terms of jobs, talent, and revenue.”