Businesses will now have until 31 March 2022 to complete their registrations
Earlier this month, the Financial Conduct Authority (FCA) confirmed that the Temporary Registrations Regime (TRR) deadline for existing cryptoasset businesses will be extended from 9 July 2021 to 31 March 2022.
Unexpected number of businesses applying for regulation
Last December, the FCA established a temporary registration regime after struggling to deal with hundreds of applications from businesses within the UK. The initial deadline was January 10, 2021, before it was pushed back to July 9. The regime allows existing crypto firms who have applied to be registered with the FCA to continue trading in their current format.
A recent press release from the FCA stated that ‘unprecedented numbers of businesses’ were withdrawing their applications as they could not meet the ‘required standards under the Money Laundering Regulations’. Despite this, The Block recently reported that 167 crypto firms are still awaiting registration, as well as 77 new crypto startups whose applications are pending a full assessment. These figures dwarf the handful of companies who have been fully processed by the FCA - with only five firms in the past year being granted full registration. These firms are Ziglu, Archax, Digivault, and two Gemini entities.
Reaction from the crypto-industry
Trade association CryptoUK, a lobby group representing more than 50 crypto firms (including Bitstocks), has been vocal in responding to the situation - publishing an open letter to Chancellor Rishi Sunak in March. The letter details several concerning issues from those within the TRR process, including non-existent or sparse communication from the FCA and being assigned case officers with a complete lack of crypto experience, resulting in an arduous process that has left many businesses frustrated and in limbo. Crypto UK Chair, Ian Taylor, concludes the letter with a warning that the FCA’s actions risked a raft of companies going bankrupt or simply leaving the country.
Again highlighting the impact to the economy should these hundreds of crypto businesses be refused registration, was MP for Tonbridge and Malling, Tom Tugendhat. He has been a staunch advocate of the UK fintech industry for some time and was the organiser of a blockchain debate in the Houses of Parliament, to which Bitstocks CEO, Michael Hudson, was invited to speak. Mr Tugendhat told MPs: “If we do not get this right, those standards [governing the crypto economy] will be set by authoritarian governments with no interest in innovation or in wild places where there is no regulation and no accountability.”
It remains to be seen whether the FCA will successfully process the remaining outstanding applications from within the crypto industry or whether they will extend the deadline for registration by a third time. However, what is clear is that greater regulatory understanding is needed on the viability of bitcoin businesses and their role in supporting the future of the UK economy.