UK regulator approved only 4 out of 28 crypto license applications in 2023

What’s new? In 2023, the UK Financial Conduct Authority (FCA) approved only 4 out of 28 applications from companies for authorization to provide crypto asset-related services. Interactive Brokers, crypto exchange Bitstamp, Japanese investment bank Nomura-backed crypto custodian Komainu, and payment company PayPal received licenses. Another 43 companies have withdrawn their applications to the FCA.

Material by DL News

What else is known? Two years ago, the current Prime Minister of the UK, Rishi Sunak, while in office as head of the Treasury, announced the intention to create conditions for the formation of a global crypto hub in the country. However, according to DL News interlocutors, these plans are now threatened by the extremely low level of registration of crypto firms by the financial regulator.

Consulting companies assisting crypto firms in filing applications attribute this situation to several reasons, including high FCA requirements and stricter rules for advertising related to digital assets. For example, the FCA has set strict anti-money laundering and counter-terrorist financing (AML/CFT) standards for local financial firms.

That said, back at the beginning of last year, the FCA told the Treasury that 85% of firms that applied failed to meet even the minimum standards.

In terms of advertising, the FCA’s strict standards for the promotion of financial products were extended to crypto companies last October. They must ensure that their advertising is clear and not misleading and adequately informs consumers about the risks associated with investing.

Industry representatives said that compliance with these requirements is complex and costly. Crypto exchanges Binance and Bybit suspended operations in the country after they went into effect.

The FCA has received a total of 337 applications since the register of virtual asset service providers was created in 2020. Since then, 45 providers have successfully registered, including Bitpanda, eToro, Revolut, and Fidelity Digital Assets. 35 companies have been rejected and 226 have withdrawn their applications.

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However, the situation could improve as early as this year as the government will begin to implement comprehensive crypto regulation, which, as previously reported, will be different from the EU’s Markets in Crypto Assets (MiCA) Regulation.