The Stats: An Underwhelming Approval Rate
Despite the grand ambitions to elevate the United Kingdom into a thriving cryptocurrency hub, the reality is a bit less rosy. The U.K. Financial Conduct Authority (FCA) has only given a thumbs-up to 41 out of 300 crypto firms vying for regulatory approval. To put that in perspective: that’s a measly 15% approval rate. If you were expecting a gold rush, you might want to rethink your exit strategy.
What’s the Hold-Up? Understanding the Application Process
Since the FCA rolled out its crypto-focused regulations on January 10, 2020, there has been a flood of applications. But it seems many firms didn’t quite understand the assignment. Out of the 265 applications processed so far: 74% either withdrew or were flat out rejected, while a small number remain under review. What gives?
The FCA hasn’t exactly laid out a buffet of reasons for the poor outcomes on applications, but it has highlighted what differentiates the good eggs from the bad. Successful applications typically include:
- A clear depiction of the firm’s business model
- Information about partner roles and responsibilities
- Details of liquidity sources
- Flow-of-funds charts
- Risk management policies
Marketing Mishaps: The Application Isn’t Your Craigslist Ad
If you thought you could jazz up your application with glittering claims about how “awesome” your crypto project is, think again. The FCA has been clear: promotional language in applications is a no-go. Companies got chopped for using applications as sales pitches. It’s like trying to sell a used car while at the dealership; not going to end well!
“Applicants’ websites and marketing material must not include language that gives the impression that making an application for registration is a form of endorsement or recommendation by the FCA.”
Compliance is Key: The FCA Doubles Down on AML Measures
In addition to the paperwork hurdles, applicants also face a rigorous compliance check. The FCA demands every firm appoint a money laundering reporting officer who is deeply involved in the application process. It’s not just ‘easy-peasy’ paperwork; compliance is a key theme in this game.
Even if you manage to get your application stamped and approved, that’s not the end of the story. Being registered is more like joining a perpetual club where your membership comes with ongoing responsibilities. The FCA is watching, folks.
Future Collaborations and Global Relations
Understanding that many crypto companies operate on an international scale, the FCA has found it beneficial to play nice with its global counterparts. This includes collaborations with regulatory bodies from across the pond, like the U.S. securities and commodities regulators. It’s like a regulatory Avengers team working to keep the crypto universe in check.
The FCA has been unequivocal; if firms decide to cut corners and engage in business without proper registration, well, let’s just say they could find themselves facing some not-so-friendly legal consequences.
