THE Financial Conduct Authority (FCA) in the UK is extending the end date for registering existing cryptoasset businesses to 31 March 2022.
The Temporary Registration Regime was established last year to allow existing cryptoasset firms that applied for registration before 16 December 2020, and whose applications are still being assessed, to continue trading.
A significantly high number of businesses are not meeting the required standards under the Money Laundering Regulations. This has resulted in an unprecedented number of businesses withdrawing their applications.
Anti-money laundering and counter terrorist financing legislation are aimed at protecting against enabling the transfer and disguise of funds from criminal activity, or funding of terrorist groups.
While this is not the only element that the FCA will assess in relation to an applicant, the FCA will only register firms where it is confident that processes are in place to identify and prevent this activity.
It argues that many cryptoassets are highly speculative and can therefore lose value quickly and currently the FCA does not have consumer protection powers for the cryptoasset activities of firms.
Even if a firm is registered with the FCA, it is not responsible for making sure cryptoasset businesses protect client assets (customer’s’ money), among other things.
Cryptoassets are considered very high risk, speculative investments. If consumers invest in cryptoassets, they should be prepared to lose all their money.
THE FCA also warns that it is unlikely that consumers will have access to the Financial Ombudsman Service or Financial Services Compensation Scheme, irrespective of whether a firm has temporary or full registration.