UK Says 90 Percent Crypto Firms Applying for Licence Lacks Money Laundering, Fraud Precautions

This disclosure is aimed at benefitting crypto asset applicants along with consultants and trade associations.

Written by Radhika Parashar, Edited by Siddharth Suvarna | Updated: 6 September 2024 19:47 IST

UK Says 90 Percent Crypto Firms Applying for Licence Lacks Money Laundering, Fraud Precautions

Photo Credit: Pixabay/ Sergei Tokmakov

359 applications have been received by the UK between January 2020 and September 1

Highlights

The UK made crypto a regulated sector in July 2023
Crypto trading addiction has been flagged as public health concern in the
The FCA have directed crypto firms to be well versed with the laws

As the UK aims to position itself as a leading hub for Web3 innovation, financial authorities are stepping up efforts to safeguard the crypto sector's stability and security. A recent report from the UK's Financial Conduct Authority (FCA) revealed that 90 percent of recent crypto firm registration applications have been rejected. Key reasons for these rejections include concerns over inadequate security measures, particularly around fraud prevention and anti-money laundering protocols.

In releasing this report, the FCA stated that the feedback is intended to assist crypto firms in better preparing for the registration process in the UK.

According to the FCA, the UK received 359 crypto firm registration applications between January 2020 and September 1. Of these, only 47 firms (14 percent) successfully registered, while 40 firms (12 percent) had their applications rejected. A significant majority—240 firms (70 percent)—withdrew their applications before a decision was made, and the remaining 13 firms (4 percent) were outright refused by the FCA.

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“We have rejected submissions that didn't include key components necessary for us to carry out an assessment, or the poor quality of key components meant the submission was invalid,” the FCA noted.

This disclosure is intended to benefit current and prospective crypto asset applicants, as well as consultants and trade associations involved in the sector. The financial authority of the UK has directed all crypto firms hoping to register in the UK to be well versed with its laws to counter money laundering.

“If any crypto asset firm, based in the UK or overseas, intends to market to UK consumers from 8 October 2023, we expect them to lawfully communicate their promotions in line with our financial promotion rules for crypto assets,” the FCA noted.

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In July 2023, the crypto sector became a regulated financial sector in the UK. As per Statista, the number of crypto holders in the UK is estimated to reach the mark of 23.9 million by 2025.

Owing to a rise in the number of young adults foraying into the crypto sector in the UK, the National Health Service (NHS) recently issued a notice to the public, flagging crypto trading addiction as a public health concern.

The UK is not alone in intensifying efforts to prevent crypto assets—known for their fast and often untraceable transactions—from being exploited by terrorists and criminals.

India, for instance, has mandated all crypto firms operating in India or looking to expand in the country, to register with the Financial Intelligence Unit, comply with prevention against money laundering (PMLA) rules, and agree to acquire the KYC details of all their users.

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Further reading: Cryptocurrency, UK, FCA, Crypto Assets, Anti Money Laundering Rules

Radhika Parashar

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Radhika Parashar is a senior correspondent for Gadgets 360. She has been reporting on tech and telecom for the last three years now and will be focussing on writing about all things crypto. Besides this, she is a major sitcom nerd and often replies in Chandler Bing and Michael Scott references. For tips or queries you could reach out to her at RadhikaP@ndtv.com. More