- This move seeks to offer the regulator ample time to deal with the application backlog.
- The privilege only applies to firms that had applied for registration before December 15, 2020.
- The FCA will let the firms eligible for temporary registration operate until June 9, 2021.
The Financial Conduct Authority (FCA), the UK’s financial watchdog has introduced a temporary registration regime for crypto firms. The regulator disclosed this information through a notice, noting that this system would allow crypto companies that had filed for registration before December 15 to continue with their operations for six months. Companies that had not applied will have to return digital currencies to their customers and shut down operations by January 10, 2021, according to the FCA.
According to the notice, the FCA’s regulatory scope expanded starting January 10, 2020, bringing the supervision of crypto firms under its purview. After this change, the watchdog mandated that all existing crypto firms comply with money laundering regulations. On top of this, the FCA directed that all crypto firms in the UK register with it before January 10, 2021.
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However, the regulator was unable to evaluate and register all crypto firms that applied for registration since it began overseeing the sector. The notice pointed out that the FCA failed to review all submitted applications because of their complexity. Topping this off was the COVID-19 pandemic, which hindered the watchdog’s plans to visit the firms.
Due to its inability to clear the application backlog, the FCA decided to extend the deadline. Instead of shutting down unregistered crypto businesses by January 10 as scheduled, the financial watchdog said it would let the firms operate up to June 9, 2021, pending approval. The regulator added that firms that had not filed for registration before December 15 will risk being subject to its criminal and civil enforcement powers if they do not cease operations by January 10, 2021.
Advice to UK consumers that deal with crypto
The FCA went on to urge UK citizens that deal with crypto-related firms to check if the firms they associate with are registered or at least in the list of firms with temporary registration. If the consumers find the companies they deal with are in neither list, the FCA advised that they check and verify that the firms are allowed to carry out operations in the UK without being registered with it. This is possible in cases where the firms are registered in different countries.
The FCA went on to advice consumers, saying that if the crypto firms they deal with are not eligible to operate in the UK, they should withdraw their funds before January 10 in the coming year.
The regulator added,
“Many cryptoassets are highly speculative and can therefore lose value quickly. The FCA does not have consumer protection powers for the cryptoasset activities of firms. Even if a firm is registered with the FCA, we are not responsible for ensuring cryptoasset businesses protect client assets (ie customers’ money), among other things. It is unlikely that you will have access to The Financial Ombudsman or Financial Services Compensation Scheme, irrespective of whether a firm has temporary or full registration.”