The UK financial regulatory body has received around 300 applications from cryptocurrency firms, but has only approved 41 of them. On 10 January, 2020, the Financial Conduct Authority (FCA) in the United Kingdom put new regulations targeting the cryptocurrency industry into effect.
These regulations are in place to oversee companies operating within this sector and to ensure that they comply with the same anti-money laundering and counter-terrorism financing regulations as traditional financial market companies.
The UK’s financial watchdog has only approved 41 out of 300 crypto firm applications for regulatory approval despite plans to make the region a thriving crypto hub.
The UK FCA reported that of the 265 applications evaluated, only 15% were granted registration, 74% were withdrawn by the firms, and 11% were denied. Additionally, 35 applications are still pending review.
The authority did not specify the reasons for the rejection or withdrawal of these petitions. Still, it provided feedback on what is considered to be of “good and poor quality”.
Feedback from the UK’s FCA regarding applications
The report stated that petitions deemed more complete included:
• A comprehensive explanation of the company’s business model.
• The responsibilities of its partners and service providers.
• The sources of liquidity.
• Flow-of-funds diagrams.
• A summary of the risk management policies and systems that have been implemented.
The report implies that some companies may have had applications denied if they could not demonstrate adequate blockchain-compliance measures to monitor on-chain transactions.
The FCA also reinforced its stance against money laundering, requiring all companies to appoint a money laundering reporting officer who is actively involved in the application process.
The UK FCA has announced that it is working with other regulatory agencies globally, particularly with the US securities and commodities regulators, to enhance regulations where necessary. This is because many companies offer services on an international level. The FCA has also warned that failure to register before conducting business may lead to criminal charges.
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