UK’s progress in crypto innovation hangs in limbo due to a lack of clarity from the watchdogs. Many high-profile companies are now looking for crypto friendlier pastures elsewhere.
If cryptocurrency-based businesses go out of business, the UK could face a mass exodus as the deadline for receiving FCA approval approaches.
Regulatory Hurdles in the UK
The cryptocurrency market is largely unregulated in the UK. However, companies associated with the industry are required to register with the Financial Conduct Authority (FCA) under the Temporary Registrations Regime (TRR), heed to Money Laundering Regulations.
So far, only 33 companies have managed to obtain permanent registration with the regulator, according to the latest reports. Days away from the crucial government deadline, crypto custodian Copper Technologies Ltd., digital bank Revolut Ltd. and 12 other platforms, which have temporary registration regimes for crypto-asset businesses, are expected to face suspension if they fail. to mark approval.
Meanwhile, London-based crypto market maker B2C2 Ltd. and crypto digital banking apps Wirex Ltd. and Trastra Ltd. withdrew from the temporary register last week. This comes after the FCA warned the companies operating on temporary authorization to either withdraw applications and shut down any UK digital asset operations or go through the process and face a risk of rejection.
Wirex confirmed that the removal would not impact customers. Copper Technologies, on the other hand, revealed that it is still in talks with the FCA after setting up an entity in Switzerland that would allow the platform to serve UK customers even if it doesn’t get the green light.
CoinBurp is the latest company whose name vanished from the registrar and exited FCA’s process. It is now looking to work with the customers via its Croatian subsidiary Wirex Digital. It appears that other companies are also following suit and have already started moving their operations to European countries with flexible regulations to be able to service the customers in the UK.
Regulating Crypto and DeFi
Earlier, the Bank of England’s Financial Policy Committee said economic function with respect to cryptocurrencies should take place within existing regulatory arrangements.
It also stressed that the legislative perimeter should be adapted as necessary to ensure a similar regulatory outcome. Both the BoE and the Treasury seek to regulate stablecoins in addition to fit international efforts to control DeFi applications.
In a related development, CryptoPotato recently reported that the UK’s advertising watchdog – Advertising Standard Authority (ASA) – has issued a warning against more than 50 crypto-related companies. These included Coinbase and eToro, and the agency told them not to encourage people to buy digital assets using credit cards or to exchange their pensions for assets such as Bitcoin.
