The UK’s Financial Conduct Authority (FCA) has warned too many crypto companies are missing glaring criminal ‘red flags,’ amid increasing political pressure to make the country a crypto hub.
“We have seen too many financial crime red flags missed by the crypto asset businesses seeking registration — with some firms lacking the necessary controls to raise flags at all,” the FCA told CityAM on Monday.
Protos reported in March that for the past six months, the FCA received complaints of about 4,300 potential crypto scams while also opening 300 probes into suspicious crypto firms.
The FCA updated its registration guidelines to include stricter money laundering and anti-terrorist financing regulations in January 2020. Last year, it made registering with the FCA mandatory — but many have still failed to do so.
Despite granting two extension deadlines that have now expired, it appears only 35 firms have become registered in the UK, including eToro and Gemini — the finance authority’s list of crypto firms that have not registered includes at least 250 companies.
Largest crypto exchange Binance had its UK application rejected in June last year. Binance is now attempting to reverse the decision.
The FCA’s role, it told CityAM, is making sure “those who run these firms are fit and proper and that they have adequate systems to identify and prevent flows of money from crime.”
However, critics are worried that current regulations are stifling potential business.
Blockchain and crypto lawyer Asim Arshad shared his own FCA woes with CityAM, saying: “Until the FCA can send out the message that applicants to the register are being dealt with swiftly and efficiently, we will continue to see crypto firms sidestep the UK as a potential jurisdiction to set up in.”
“The issue appears to be more an organizational shortfall within the FCA itself,” he said.
UK politicians picking on FCA crypto approach
Last year there was an uptake in calls to tighten crypto regulation in the UK. But now it seems UK politicians are looking to keep things loose.
Chancellor Rishi Sunak touted plans for wider crypto adoption in April which touched on recognizing stablecoins as a form of payment while making plans for the Royal Mint to release NFTs.
Ex-health secretary Matt Hancock said in a UKTN interview: “I hate the patronizing idea of regulators telling people what they can and can’t do with their money.”
While speaking at a CryptoAM conference, the disgraced politician made calls for an “attractive” tax system and “liberal” regulatory regime for the UK to become “the jurisdiction of choice for crypto,” (our emphasis.)
“The job of the regulators is to make sure there is high-quality information and that the market functions effectively,” he said.
Hancock resigned from his position as the UK’s health minister after news broke he had an affair with a political aide he himself appointed. A photo of the pair kissing was leaked last year, which also showed Hancock had flouted COVID-19 distancing guidelines.
The former Conservative MP has three children and a now-estranged wife.