On Thursday, March 31, U.K’s top financial regulator – Financial Conduct Authority (FCA) – shall be ending its Temporary Registration Regime (TRR) for crypto businesses. Thus, companies that follow the registration criteria won’t be allowed to continue their operations.
As of March 25, only 33 companies have managed to register with the FCA. Other 12 companies are still on temporary registration including big names like Blockchain.com and Revolut. Thus, registering with the FCA seems to be a huge task for crypto firms.
Amid solid retail participation in crypto over the last two years, the FCA has taken a tough stand. Some of the U.K’s top financial authorities such as the central bank and the Treasury have initiated tough measures while stepping up scrutiny.
While the FCA can extend its deadline later to June 2022, some companies have already started moving operations abroad in order to be able to serve their U.K. customers. Last week, six companies including popular names like B2C2 Ltd. and crypto digital banking apps Wirex Ltd. fell off the temporary registrar.
B2C2 said that all spot trading of crypto assets shall be handled by its U.S. entity. Another spokesperson of Wirex said that it will be offering services to its U.K. customers through its Croatian subsidiary Wirex Digital.
The FCA has given a strong warning that companies not meeting its benchmark requirements can choose to withdraw their application.
Is U.K Falling Behind Europe In Framing Crypto Regulations?
London-based crypto custodian Copper is now making parallel plans to gain regulatory approval in Switzerland. Although Copper continues its dialogue with the FCA, it still hasn’t received any verdict on the full registration from the FCA.
Former U.K. Chancellor of the Exchequer Philip Hammond who serves as a senior advisor to Copper said that it was “frankly quite shocking” that the U.K. has fallen behind other financial hubs such as the European Union in setting regulatory clarity for crypto. He said that such behavior can see talent fleeing out of the country.
However, the interesting this with FCA’s registration is that non-domiciled companies are better to serve U.K. customers than those going through the registration process. Some of the world’s biggest crypto firms are still serving in the U.K without FCA registration since they can facilitate trading from overseas. Blair Halliday, head of U.K. operation at Gemini said:
“I’ve had emails from other companies telling me that they’ve just spun up a business in whichever jurisdiction, and that’s the entity that will be servicing U.K. consumers. Our concern with any legislation is where it unfairly impacts firms going about it the right way in jurisdiction, and by definition, drives customers to an easier location off-site. That’s a potential byproduct of some of these proposals — how on earth can that be a positive?”
The U.K’s FCA has also recently warned crypto firms advertising in the country.
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