Robinhood’s Ziglu buyout comes with FCA licensing shortcut
California-headquartered crypto exchange Robinhood is making another assault on the UK and European markets with the purchase of London-based trading app Ziglu, reports CNBC.
Ziglu allows users to trade 11 different cryptos and earn interest on their Bitcoin. According to Robinhood, it will help to accelerate its “international expansion, both in the UK and across Europe.”
The exact terms of the deal are still under wraps. However, as of September last year, the platform, which was founded in 2014, had a value of somewhere in the region of £85 million ($111 million).
Speaking after the announcement, Ziglu founder and CEO Mark Hipperson said:
“Ziglu and Robinhood share a common set of goals, working to reduce the barriers to entry for a new generation of investors, and we’re excited to pursue that mission together.”
“As part of Robinhood, we’ll supercharge Robinhood’s expansion across Europe and bring better access to crypto and its benefits to millions more customers.”
Robinhood gained a Financial Conduct Authority (FCA) license back in 2019 but shelved plans to move into the UK after one of its users committed suicide. The man wrongly believed he lost more than $700,000 using the app.
At the time, Robinhood said it was investing in its foundational systems and working to strengthen its core US business.
However, Ziglu was more than happy to hoover up any frustrated traders on Robinhood’s waiting list.
Buying FCA accreditation could be easier than gaining it yourself
The buyout could bring with it an added bonus for the California-headquartered trading giant. Namely, an oven-ready accreditation from the FCA with regards to UK money laundering laws.
Since January 2020, any organization wanting to provide specific crypto-related services or products in the UK has needed to comply fully with the FCA’s money laundering regulations (MLRs).
Robinhood’s original FCA license didn’t include this accreditation. However, Ziglu is currently one of only 34 crypto companies in the UK to get an okay from the watchdog.
The FCA’s accreditation process is notoriously difficult for firms to navigate. Many withdrew applications because they could or would not meet the required money laundering standards.
Indeed, last month, an FCA spokesperson told CNBC that over 80% of companies had withdrawn their applications or been turned down.
Read more: Robinhood trader sues over ‘false and misleading’ docs padded with crypto
“We’ve seen a high number of the cryptoasset businesses applying for registration not meeting standards there to help ensure firms are not used to transfer and or disguise criminal funds,” the FCA spokesperson said.
“Firms that do not meet the expected benchmark can withdraw their application. Firms that decide not to withdraw have the right to appeal our decision to refuse, including through the courts.”
One of the most recent high-profile victims of the FCA’s strict, no-nonsense approach is crypto firm Copper Technologies.
The company was unable to close a $500 million funding round earlier this month due in part to uncertainty around the company still being on the FCA’s temporary accreditation list.
Companies on the list can continue to trade pending the outcome of their full application.
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