Uncertain Future for Crypto Companies in the UK

The UK’s Financial Conduct Authority, or FCA, has given some cryptocurrency companies more time to register with the regulator beyond the original March 31st deadline. The extension only applies to a few companies, including the fintech company Revolut and crypto start-up Copper. These firms are allowed to continue trading after the temporary registration regime closes. Many firms have not had the deadline extended, however, and therefore can no longer operate in the UK.

Regulating Crypto

Cryptocurrency firms operating in the UK must register with the FCA according to money laundering regulations. But several companies have yet to make the cut. The FCA set up a temporary register to allow firms to continue trading while they sought full authorization. Only 12 businesses remain on the temporary regime.

The main point of cryptocurrencies has always been to be decentralized, meaning these currencies are not controlled by any government or financial institution. However, this does not mean that crypto is, or should be, completely free of regulation. While some proponents believe crypto’s utility for crime is overstated, there’s no denying that some criminals and criminal organizations do use crypto, and this money laundering law by the UK is designed to prevent that.

Those crypto firms that are still operating on the temporary regime may feel added pressure to register with the FCA to gain official acceptance after crypto valuations took a major hit this past spring. In one week in early May, crypto heavy hitters such as Bitcoin and Ethereum lost over 20% of their value in a huge crash. For smaller players it was even worse; dogecoin lost 35% of its value.

The Future of Crypto in Britain

The crypto crash has caused many to question the ethics of the recent surge in crypto and non-fungible token (NFT) advertising. Many of these advertisements have featured celebrities extolling the virtues of cryptocurrency or selling their own NFTs, who have remained silent on the recent drop in value of some of these cryptocurrencies and NFTs.

Nevertheless, the FCA register is less focused on protecting investors from crashes than it is with preventing money laundering. While their execution of the registry has received criticism, the need for such a registry has largely been accepted by crypto firms. For example, Paysafe, a fintech firm that’s on the FCA’s full register, has stated it welcomes, “heightened regulatory oversight” of the crypto industry.

For its part, the FCA says a “high number” of crypto firms have not met the required anti-money laundering standards. Only 33 companies have made it onto the full register at the time of writing. If only 33 firms are allowed to operate in the UK, this could undermine the decentralized, democratizing vision many have for crypto.

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