UK FCA: Stringent registration standards for crypto companies do not hinder innovation, fully committed to preventing financial crimes

The UK Financial Conduct Authority (FCA) recently provided guidance on the registration process for cryptocurrency companies, stating that they do not allow crypto firms to be used as platforms for financial crimes, hence the strict registration standards are deemed necessary.

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Challenged for Being Too Strict, FCA: Does Not Hinder Industry Innovation

FCA's Director of Digital Assets, Val Smith, stated that many have questioned the strict registration standards for cryptocurrency companies in the UK, expressing concerns that this may impede innovation and even affect the UK's leading position in the global financial sector. However, Smith clarified that FCA does not reject applications arbitrarily, as they place great importance on preventing cryptocurrency companies from becoming platforms for financial crimes by criminals. Relaxing standards could potentially fuel activities like terrorism, organized crime, and human trafficking.

Smith emphasized that if the cryptocurrency industry develops without a foundation of security and trust, it is akin to "building a house on sand," susceptible to collapse at any time. Therefore, FCA aims to establish a solid foundation through collaboration with the government, industry, and other countries to not only ensure market security but also promote the industry's long-term development.

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Strictly Imposing Registration Standards, Individual Assessments for Different Companies

Smith stressed that preventing financial crimes and building trust in the financial system are equally crucial. FCA will apply the same strict standards to all companies seeking registration, including cryptocurrency companies, to maintain market competitiveness. Smith mentioned that they would also provide various support to encourage cryptocurrency companies interested in registration to engage with FCA early and receive guidance and assistance.

Smith stated that they conduct a comprehensive assessment based on each company's actual operations, management processes, personnel involved, and clients, rather than applying a uniform evaluation process. This is why the review times for applications vary.

FCA Cracks Down on Financial Crimes, Aims to Safeguard Consumer Rights

As the UK's cryptocurrency regulatory framework gradually improves, FCA will continue to closely monitor the registration progress of cryptocurrency companies. Smith emphasized that FCA's primary mission is to protect consumers and the integrity of the financial system, and only companies that meet the requirements will be registered, with ongoing elimination of potentially risky enterprises.

According to previous reports, in a bid to combat financial crimes thoroughly and enhance regulations on marketing of crypto assets earlier this year, within three months of implementing the regulations, FCA issued warnings to 450 companies engaging in illegal marketing of cryptocurrency assets. As illustrated in the image below: In the 2023/24 fiscal year, FCA revoked licenses for a total of 1,261 companies, double the number from the previous year of 2022/23. Over 87% of cryptocurrency company registration applications were rejected and denied by FCA.