The UK’s Financial Conduct Authority (FCA) has reported that nearly 90% of cryptocurrency companies that applied for registration under the country’s anti-money laundering rules failed to secure approval in the last financial year.
According to the FCA’s 2024 annual report, the majority of applications were withdrawn, rejected or refused due to weak anti-money laundering protocols.
Crypto License Flaws and Regulatory Challenges
In its latest report, the FCA revealed that only four firms met the required standards out of 35 applications received.
BNXA (Binance’s payments partner), PayPal UK and Komainu (a joint venture of Nomura) were among those approved by the regulator. However, it withdrew fifteen applications, likely due to their inability to meet the FCA’s anti-money laundering requirements. Ultimately, nine applicants were rejected.
The regulator also clarified in a statement that applications that were missing essential components or contained low-quality information were considered invalid.
The FCA has been responsible for supervising and registering crypto businesses under its anti-money laundering rules since 2020.
Crypto businesses in the UK are required to obtain a license before providing any services involving virtual assets. In short, the FCA’s licensing regime protects UK investors. The authority ensures that registered companies operate fairly, transparently, and with measures in place to prevent illegal activity.
Due to regulatory efforts, the regulator has approved only 44 companies out of 359 applications received since January 2020.
Crypto companies complain about lengthy registration process
Additionally, the lengthy application process, averaging 459 days per registration, has received criticism from crypto companies, with many expressing frustration with long wait times, lack of feedback, and perceived unfair treatment.
In a recent statement, several companies indicated that the lengthy registration process has led them to consider regulatory approval in other regions. All while still serving UK-based customers from overseas.
Ultimately, the Labour government, elected in July 2024, ended up pausing new legislation related to crypto assets. Therefore, the future of the crypto regulatory landscape in the UK still remains uncertain.
