Nearly 90% of crypto firms applying to be registered in the United Kingdom in the last 12 months failed to meet the standards of the country’s financial watchdog.
According to the UK Financial Conduct Authority’s (FCA) annual report for 2024, crypto firms had a hard time getting approved due to insufficiencies in their fraud protection and money laundering protocols.
“Over 87% of crypto registrations were withdrawn, rejected or refused for weak money laundering controls,” wrote the report.
The UK FCA rejected nearly 90% of crypto business registrations. Source: FCA
The regulator only approved 4 of the total 35 applications from crypto firm registration in the last year. 15 applications were withdrawn and 9 were rejected.
“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,” wrote the regulator in a separate feedback statement.
The FCA added that it had finalized a new “financial promotion perimeter” for crypto advertising in June 2023, to ensure that crypto ads in the UK were clear, fair, and not misleading.
The regulator also noted that the general public in the UK had become more aware of potential crypto scams with 63% of consumers calling about a scam doing so before they invested in the project, a 5% increase from the year prior.
Crypto firms may look outside the UK
On Aug. 30, international law firm Reed Smith warned that crypto firms looking to get a start may want to look outside the UK, citing extremely long wait times and insufficient political will at the FCA to handle new crypto applications in a timely manner.
Over the last three years, it has taken an average of 459 days for the FCA to process a crypto firm’s registration. The watchdog has spent a collective 25 years’ worth of manpower on processing the applications.
Related: UK’s FCA provides more guidance on crypto promotion compliance
Meanwhile, 186 applications withdrew their forms over the last three-year window.
“If it’s the case that applications are falling because crypto firms have essentially given up waiting and started looking abroad, this should send a clear warning about London’s competitiveness,” said Reed Smith partner Brett Hillis.
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