March 31 marks the deadline for crypto firms that offer crypto services to register with the U.K. financial watchdog the Financial Conduct Authority (FCA) and could see crypto companies such as fintech firm Revolut being forced to shutter business in the UK, reported CNBC.
The deadline had previously been extended last year but many within the crypto sector that were temporarily registered have met with delays and silence from the FCA’s end when attempting to register. The FCA is in charge of overlooking crypto firms’ practices to prevent money laundering and had previously reported that many crypto companies had withdrawn applications since they were failing to meet the anti-money laundering requirements.
“The process has been a total disaster from the FCA’s side of things,” one lawyer working with the crypto companies told CNBC on the condition of anonymity.
Of all of the firms that have put in applications, only 33 have gained approval; to date over 80% of crypto companies assessed by the regulator had been rejected or withdrew their applications.
Companies that have withdrawn applications have since shifted their trading elsewhere, including in the U.S. Such is the case for B2C2, a crypto trading company located in London that has moved trading over to its U.S. arm, and could be indicative of how regulation could look in the U.S. if not approached the right way.
“While major jurisdictions are spotting the opportunity and the risk, the U.K. is emphasizing the risk,” Mauricio Magaldi, global strategy director for crypto at 11:FS, a fintech consultancy, told CNBC. “By moving too fast and too narrow, rules and timeframes create hurdles to crypto firms that could potentially displace them from the U.K. market.”
Threading the Regulatory Needle for Crypto in the U.S.
Earlier this month President Biden laid out a comprehensive Executive Order calling for a detailed analysis of the crypto sector, implications for a CBDC, details of risks associated with it, while also highlighting the potential the U.S. could have as a global leader within crypto should it merit finding a way forward through regulation.
Highlighted among the potential risks that currently fall outside of regulatory oversight include exchanges and crypto firms engaging in crypto services, which could mean new regulations or definitions for crypto overall.
“Some digital asset trading platforms and service providers have grown rapidly in size and complexity and may not be subject to or in compliance with appropriate regulations or supervision,” wrote President Biden in the Executive Order.
Regulation could potentially reshape the crypto landscape within the U.S., but recognition and having a clear framework would go a long way to answering a lot of unknowns for U.S. investors while offering protections that currently do not exist within crypto investing.
“The United States is pushing to be not just on the global stage for crypto but to be one of the directors of how this all plays out, and that’s tremendously important,” said Katherine Dowling, Bitwise General Counsel and COO in a recent video.
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