Revolut faces regulatory challenges in the UK? Earned £1.9 billion this year but still lacks UK banking license.

Revolut, a UK-based fintech startup founded in 2015, launched its bitcoin buying, custodial, and transfer services in 2017. It currently offers trading and transfer services for over 30 cryptocurrencies. However, it recently announced the discontinuation of cryptocurrency services for US users and temporarily suspended cryptocurrency purchases for UK business customers. According to Bloomberg, Revolut reported significant revenue growth in 2023, but there seems to be no progress regarding its application for a UK banking license.

Revolut Suspends Cryptocurrency Purchases for UK Business Customers

According to The Block, Revolut's UK business customers can no longer buy new digital assets, but they can still hold or sell cryptocurrencies. Revolut is "pausing trading to allow more time to adapt to the new requirements set by the Financial Conduct Authority in October." Retail customers are not affected at the moment.

Revolut stated in an email:

This move aims to enhance the customer journey and provide additional protection for both new and existing investors in cryptocurrencies. We need to adjust our current business crypto offering to ensure compliance with all the new requirements.

In August, Revolut announced that it would no longer offer cryptocurrency services to US users, citing challenging regulatory environment in the US.

Revenue Soars in 2023, But Revolut Still Struggles with Obtaining UK Banking License

According to Bloomberg, Revolut is expected to generate $1.9 billion in revenue this year, surpassing last year's $1 billion.

The fintech startup, valued at $33 billion in its latest funding round in 2021, has yet to receive a banking license from UK regulators. It was previously found by the UK Financial Reporting Council to have deficiencies in its audits and a high risk of misstatement, putting pressure on Revolut to improve its internal financial reporting controls. Revolut is expected to release its audited financial statements for 2022 in the coming days, but it is already several months overdue.

Earlier this year, interest income generated by Revolut's business across Europe was three times its forex revenue. Cryptocurrency activities have been a boon for the company in 2021 but have now declined to less than 5% of the platform's total volume.

Meaghan Johnson, a fintech consultant, commented:

If they can ultimately overcome the regulatory challenges in the UK, obtaining a banking license would open up many new product areas for them to explore in-depth.